DAVY VIEW

ARYZTA has agreed to dispose of its North American assets for US$850m (€710m) to private equity. The sale price is in line with the mid-point of earlier guidance though below our expectations. The low deal multiple of c.6-7x EBITDA reflects both the legacy underperformance of the business and distressed nature of the process. The disposal lowers FY21E net debt/EBITDA from 3.9x to 1.4x, while enhances liquidity. Total gearing, including hybrid bonds, reduces from 7.8x to 7.2x and to 6.0x by FY22E. Trading on a pro-forma FY22E EV/EBITDA of c.10.5x, the current valuation infers significant operational (earnings) progress. The H1-21 EBITDA (continuing group) was in line with our forecasts.