The latest move in the tug of war between Middleby Corp and Ali Group to buyout US-based catering equipment manufacturer Welbilt has seen the latter make an improved offer.
Italian-headquartered conglomerate Ali Group’s latest bid is to acquire all outstanding shares of Welbilt common stock for US$24.00 per share in cash, as compared to its previous US$23.00 per share proposal.
The latest offer represents a premium of 3.5% to the Welbilt closing share price on 2 July 2021, the last trading day prior to the 5 July 2021 definitive proposal.
Ali Group calculates this is a premium of approximately 11.4% to the implied value of the all-stock transaction with Middleby Corp as of 2 July 2021, the last trading day prior to Ali Group submitting its proposal to Welbilt, and a premium of 53.6% to the closing share price on 20 April 2021, the last trading day prior to announcement of the Middleby transaction. Ali Group’s initial offer was 47.2% of that day’s closing share price.
The European catering equipment giant reports its new bid provides certainty of securing regulatory approval with the inclusion of a ‘hell or high water’ provision, which requires Ali Group to take all actions necessary, including divestitures, to obtain all requisite antitrust approvals without undue delay.
Ali Group has also obtained fully underwritten, binding commitment letters for debt financing from Goldman Sachs International and Mediobanca.
The group issued the following statement: “We are pleased to present the Welbilt board of directors with the compelling, certain and upfront value of our fully financed, all-cash offer to acquire Welbilt for US$24.00 per share, which provides even greater value than our initial proposal and includes the certainty of a “hell or high water” provision.
“Ali Group has completed due diligence and secured committed financing, and our proposal continues to be superior in every respect to Welbilt’s pending all-stock transaction with Middleby, with a significant premium to Welbilt shareholders and a clear path to completion. Further, given the minimal product overlap between our two companies and the fact that our proposed transaction does not require an Ali Group stockholder vote, we believe our proposal offers far greater certainty of closing than the Middleby transaction.”
The company added: “We firmly believe our proposal represents the most attractive opportunity for Welbilt shareholders and expect the Welbilt board of directors to deem our all-cash proposal superior to the pending all-stock transaction with Middleby. We have long admired Welbilt’s heritage, breadth of products, brand strength and management team, and look forward to executing a definitive merger agreement, welcoming Welbilt and its employees to the Ali Group family and creating an industry leader with a comprehensive product portfolio and global footprint.”
Middleby Corp previously described Ali Group’s initial rival bid as “highly opportunistic and conditional”.
Catering Insight understands that Welbilt’s board now has to determine whether the new offer is superior to the Middleby agreement, and if so, would have to provide notice to terminate the original agreement with Middleby, who would then have five days to counter, or let it lapse.
The same procedure would apply to Ali Group if Middleby countered with another bid, so depending on how many offers the two conglomerates are willing to make, the contest could continue for a while yet.