Welbilt’s board of directors have signalled their intention to accept a takeover bid from Ali Group, in the latest development of battle over the catering equipment manufacturer’s acquisition.
While Middleby Corp first announced plans to acquire Welbilt in a deal worth US$4.3bn in April, rival Ali Group then entered the fray in May with a proposal to acquire all of the outstanding shares of Welbilt common stock for US$23 per share in cash.
Last week, the European-headquartered catering equipment conglomerate upped its bid to US$24 per share, which it believes provides “even greater value than our initial proposal”.
Welbilt has deliberated over the improved offer and has now determined that the revised unsolicited proposal constitutes a ‘Company Superior Proposal’, as defined in its previously-announced merger agreement with Middleby Corp.
The board has 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.”
Welbilt has therefore notified Middleby that it intends to terminate the merger agreement with the US-headquartered group, which gives Middleby five business days to negotiate further amendments to its proposal. If another bid is placed, Welbilt’s board would then have to deliberate whether this would cause the Ali Group proposal to no longer constitute a ‘Company Superior Proposal’.
For its part, Middleby remained convinced that its initial deal was superior to Ali Group’s proposal, prior to Welbilt’s latest pronouncement.
Within its latest management forecast for investors, the business stated: “Middleby believes its signed, definitive agreement provides Welbilt shareholders with a superior value proposition.
“Commentary on the transaction from our equity research analysts has been overwhelmingly positive. In addition, based on our strong performance and improved outlook, they have raised their standalone price targets for Middleby’s stock to an average of $210.44, which implies a value of the merger consideration of $26.09.
“Our consideration mix allows Welbilt’s shareholders to participate in the future benefits of the combination. Through our ongoing work, we have a high level of confidence in our ability to meet or exceed the $120m of run-rate cost synergies and business transformation plan savings identified during our process.
“This synergy opportunity represents an incremental value of more than $3.00 per share to Welbilt shareholders. We are increasingly confident that the combined company will have the ability to better serve its customers and continue to grow at rates higher than the overall market for years to come.”
Middleby then highlighted transaction points that it feels highlight the superior qualities of its offer: “Our proposed merger will be tax-free to Welbilt’s shareholders. We have almost two and a half months of engagement with regulatory authorities and have made significant progress towards completing the transaction.
“Our transaction has no financing requirement. The Definitive Proxy Statement was declared effective on 11 June and the shareholder vote for Middleby and Welbilt is on 21 July 2021.”