TORONTO — In a surprise announcement to financial analysts late last week, Tim Hortons reported that its joint-venture partner in its baking operations, the Swiss specialist bakery conglomerate Aryzta AG, has pulled the trigger on a shotgun provision that allows one side to buy out the other at a specified price. Earlier last week, Tims had reported big Q1 gains.
Publicly traded in Switzerland and Ireland, Aryzta was formed in August 2008 through the merger of Iaws Group PLC, which had created the technology for the par-bake system used by Tim Hortons, and Hiestand Holdings AG. Tim Hortons must now decide between spending an unspecified amount of money to take control of its par-bake facility located in Brantford, Ont., which is absolutely essential to its operations, or see Aryzta take full control of this key facility.
Tim Hortons has supply rights for seven years in the event that it is required to sell its joint-venture interest. The par-bake facility and the cost of its sole-sourced product is already a contentious issue with some franchisees. This could be acerbated once the valuation is made public.
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