Aryzta to buy bakery stake from Tim Hortons

by Eric Schroeder
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ZURICH, SWITZERLAND — Aryzta AG has agreed to acquire a 50% interest in Maidstone Bakeries from Oakville, Ont.-based Tim Hortons Inc. for €349 million ($448.5 million). Aryzta already owns a 50% stake in Maidstone, which operates a 400,000-square-foot bakery in Brantford, Ont.

The Maidstone facility was designed, constructed and commissioned in partnership with Tim Hortons in 2002-03, and it allowed Tim Hortons to provide fresh baked foods across all parts of the day under the company’s “always fresh” bakery concept. The facility has the capability to produce a broad range of products, including sandwich carriers, handheld snacks, and breakfast products. It generates annualized EBITDA of €49 million operating at an estimated 55% of current capacity utilization, according to Aryzta.

With the acquisition of the remaining interest in Maidstone, Aryzta said it will be in a position to market Maidstone’s spare capacity across all customer channels with a particular focus on its recently expanded customer base from its acquisition of Fresh Start Bakeries. The increased capacity utilization is expected to add €409 million in value for Aryzta, the company said.

Maidstone currently has a contract to exclusively service Tim Hortons through 2016, which the Canadian restaurant operator may extend to 2017.

“The team at Maidstone Bakeries has been very committed to our business and has provided our restaurant owners with high quality products and excellent support,” said Don Schroeder, president and chief executive officer of Tim Hortons Inc. “We look forward to working with them after the closing of this transaction. Under terms of the arrangement, we have continued sourcing and pricing formula commitments that extend until early 2016, and at our option until late 2017, for donuts and Timbits. In addition, we have flexibility to secure alternative means of supply after the supply agreement expires if necessary.”

The transaction is expected to close by the end of the year at the earliest.

Separately, Aryzta said its U.S. subsidiary, Fresh Start Bakeries, is in the process of completing a $48 million investment in bakeries in Taiwan, Singapore and Malaysia, as well as beginning construction on a new bakery in Brazil. The bakeries are expected to serve a quick-service restaurant operator that is expanding in the regions.
 
“These investments are keeping with our strategic positioning of developing customer partnership models with leading operators in every channel to customers,” said Owen Killian, c.e.o. of Aryzta. “Aryzta highly values its relationship with Tim Hortons and welcomes the opportunity to enhance the value of Maidstone Bakeries, which complements our recent investments in North America.

“These investments significantly enhance our bakery capability in North America and in the emerging Q.S.R. growth regions of Latin America and Asia.”
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