By Business & Finance 
Because …
He has helped lead IAWS, owner of Cuisine de France, to become part of that very exclusive club of Irish companies that are truly global in nature. The latest step in that process is the plans by the food group to merge with Swiss bakery group Hiestand.
The merger will see the birth of a new firm called Aryzta. Assuming it receives shareholder approval, the merger is expected to be completed in the third quarter of this year. With tough economic conditions prevailing, there are likely to be many challenges for the new company. But few would argue this type of diversification is not a good idea.
Both companies specialise in the bakery and convenience food markets but they have quite different geographic footprints. Both have spread their wings in recent times but IAWS has looked (very successfully) to North America, while Hiestand has expanded in Australia and Japan. IAWS chief executive Owen Killian was quick to point this out when announcing the deal. “The beauty of the merger is that the companies are very complementary to each other. The proposed transaction will create a global food business focused on niche segments of the value-added bakery and convenience food market.”
Impressive scale …
The new company, which will have Killian at its helm, certainly will have an impressive scale. The two companies hope that the merger will lead to a doubling of earnings over the next five years and combined revenues will be €2.3bn. It will have 8,000 employees, 23 manufacturing plants and 111 distribution centres serving 200,000 customers on four continents.
Although the new entity will be incorporated in Switzerland, it will retain a very Irish feel. Apart from Killian’s role as chief executive, it will also retain the chairman, chief operating officer and chief financial officer from IAWS. It will become one of the Iseq’s 10 most valuable companies when it lists in mid-August.
The roots of this deal go back five years. At that time, IAWS acquired a 22% stake in Hiestand. It further increased this in 2005 to 32%. The most recent deal involves IAWS acquiring a further 32% from private equity firm Lion Capital. The value of this deal, in IAWS shares and €30mn cash, is estimated to be around €230mn.
Increased profits …
Even before this deal was announced, there was much to admire about how IAWS has gone about its business. Despite the downturn in the global economy and the soaring price of food, it reported a 40% increase in underlying pretax profits for the six months to the end of January. Pretax profits before exceptional items were €78.5mn, as sales rose 34.5% to €1.13bn.
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