BREAKING NEWS: Middleby refuses to up Welbilt offer, leaving way clear for Ali Group acquisition

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Welbilt looks like it will be heading into Ali Group’s embrace, after Middleby Corp refused to increase its takeover offer.

It looks like Ali Group may have won the war with Middleby Corp over the acquisition of US-based catering equipment manufacturer, Welbilt.

Last night, Middleby issued a statement detailing that it is refusing to increase its takeover offer, which was worth US$4.3bn.

The conglomerate said it will not exercise its right to propose any modifications to the terms of the merger agreement following rival Ali Group’s improved offer of US$24 per Welbilt share, and will allow the five-day period to counter the bid to expire.

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Middleby expected that its original merger agreement with Welbilt would terminate at the end of the US business day yesterday.

Timothy FitzGerald, CEO of Middleby said: “We believe that the previously agreed terms of the merger agreement between Middleby and Welbilt offered significant long-term strategic value to the Welbilt shareholders through the ability to participate in substantial upside opportunity from Middleby’s continued growth, while remaining attractive to our existing Middleby shareholders.

“As we considered our options over the course of the match period, we concluded to deploy our substantial financial resources wisely. We are excited about the momentum of our business and future prospects of our three industry-leading foodservice platforms. As a seasoned acquirer, we remain disciplined and committed to ensuring the best outcome for our Middleby shareholders.”

In accordance with the terms of the merger agreement, Middleby says it will be entitled to a termination fee of US$110m to be paid by Welbilt simultaneously with the termination of the deal.

FitzGerald added: “The additional cash infusion Middleby stands to receive upon termination will put us in an even better position to execute on our existing M&A growth strategy, as we continue to build upon on our long-standing track record of value-creating deals.

“Looking ahead, we remain highly confident in our ability to drive continued growth and profitability and believe we are uniquely positioned to deliver superior value creation for our shareholders.”

Last week, the Welbilt board of directors had indicated that Ali Group’s bid constituted a ‘Company Superior Proposal’. The board calculated that the latest bid implies an enterprise value of approximately US$4.8bn.

The directors issued a statement to say: “The proposal is binding on Ali Group and may be accepted by Welbilt prior to 14 July 2021. Closing of the transaction would be subject to approval by the stockholders of Welbilt, receipt of other regulatory approvals and other customary closing conditions.”

When Ali Group presented its improved takeover offer on 5 July, it calculated it 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 stated: “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.”

Tags : acquisitionAli GroupbusinessbuyoutMiddleby Corporationmiddleby grouptakeoverwelbilt
Clare Nicholls

The author Clare Nicholls

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