IAWS and Hiestand to Merge

09/06/08 The Boards of IAWS and Hiestand have announced the creation of ARYZTA AG through an agreed merger of IAWS and Hiestand. IAWS has agreed to acquire the shares of Hiestand owned by Lion Capital in exchange for approximately 12.7 million newly issued IAWS shares and cash of €30 million. The acquisition of these shares is subject only to certain anti-trust clearances being forthcoming.

The IAWS Board believes that the Merger represents a merger of two complementary businesses on the basis that:

• IAWS and Hiestand operate in the value added bakery segment with a focus on innovative product development;
• IAWS operates in North America, UK, Ireland and France while Hiestand’s main operations are Switzerland, Germany, Austria, Poland, Japan, Malaysia and Australia;
• IAWS and Hiestand deliver to an extensive network of customers in food service and retail channels;
• IAWS and Hiestand have proprietary intellectual property and extensive direct store delivery infrastructure;
• IAWS and Hiestand have a shared corporate culture that emphasises people and process, customer focus and consumer relevance; and
• On a combined basis IAWS and Hiestand had pro forma revenue of €2.3 billion (CHF3.8billion), EBITA of €213 million (CHF343 million) and net income of €145 million (CHF233 million) based on IAWS audited figures for the financial year ended 31 July 2007 and Hiestand audited figures for the financial year ended 31 December 2007.

The strong strategic fit of the businesses combined with a leading management team will create the global leader in value added baked goods. This can be achieved by delivering sustainable revenue and long-term earnings growth while deriving advantage from leveraging synergy opportunities.

As the businesses are complementary and the respective management teams are well known to each other the directors of IAWS believe that the integration risk is low. Owen Killian, chief executive of IAWS has been a member of the board of directors of Hiestand for a number of years.

Commenting on the proposed Merger, Killian, said: “The proposed transaction will create a global food business focused on niche segments of the value added bakery and convenience food market. ARYZTA will have geographical reach extending from North America through eastern and western Europe to South East Asia and Australia. Both IAWS and Hiestand have excellent track records of growth in complementary geographies. ARYZTA will seek to build on this excellent track record to deliver significant value creation to its shareholders and bring strategic benefits for employees, customers and suppliers.”

Wolfgang Werlé, Chairman of Hiestand said: “ARYZTA is the culmination of a successful 5 year partnership between Hiestand and its long time shareholder IAWS. We are proud to become part of the world’s leading global company for value added bakery goods. ARYZTA will have 23 manufacturing and 111 distribution facilities in complementary geographies servicing over 200,000 customers and we expect it to bring enhanced benefits to shareholders, employees, customers and suppliers of both Hiestand and IAWS.”

It is expected that the Scheme Document will be posted to Shareholders on or around 27 June 2008 and that the Scheme will become effective on or around 20 August 2008, subject to the satisfaction of all relevant conditions. The Proposals and the completion of the Merger are conditional upon, among other things, certain regulatory conditions being fulfilled to the reasonable satisfaction of ARYZTA and IAWS and the completion of the Hiestand Merger.

IAWS is an international lifestyle food and agri-nutrition company with operations in Europe and North America. The lifestyle food business focuses on niche high quality growth segments of the value added bakery and convenience food market. Origin, which consists of the group’s agri-nutrition and ambient food businesses was successfully listed in 2007. IAWS is the majority shareholder in Origin and consolidates its results. Hiestand, founded in 1967 in Switzerland, is a leading European value added bakery and convenience food company focusing on the high quality growth segment of the market. With its innovative products and services it holds strong market positions in Switzerland and Germany and has fast growing operations in Eastern Europe, Asia and Australia. ARYZTA will be the global leader in value added baked goods and will focus on creating value for its shareholders through the development of its lifestyles foods business and its investment in Origin.