Speciality bakery giant Aryzta has agreed a deal to sell 100% of its bakery business in the US and Canada for $850m (€715m), in a move that will significantly reduce the group’s debt levels.

The company announced on Friday last week that it had agreed a deal with US private equity firm Lindsay Goldberg to sell all of its equity and assets in its bakery businesses in the US and Canada.

The company said it expects the transaction to be completed by the end of July.

Goodbody analyst Jason Molins said the disposal of its US and Canadian bakeries “vindicates” the decision made before Christmas by the board of Aryzta to reject an €800m takeover offer from US firm Elliott for the entire Aryzta business.

Following the announcement, Aryzta reported better than expected half year results for its 2021 financial year on Monday this week. The company reported half year sales of just under €1.3bn, which was down 22% year-on-year. Underlying earnings (EBITDA) were down almost 27% to just under €125m, as earnings margins narrowed to less than 10%.

Aryzta blamed the fall in sales and profits on the negative impact of COVID-19, but said the results were ahead of expectations.

The bakery giant said it is on track to deliver a 25% reduction in overhead costs this year, while its cash liquidity remains healthy at €523m. Aryzta gave no outlook for its full financial year for 2021, but said it is targeting a return to earnings margins of 12.5% by next year.