Pasco restaurant equipment supplier Welbilt to be sold in $4.3 billion deal

The New Port Richey company has struggled during the pandemic, like other businesses tied to the restaurant industry.
Welbilt, a maker of commercial kitchen appliances and equipment based in New Port Richey, is slated to be acquired by Illinois-based Middleby Corp, [Photo courtesy of Welbilt]
Welbilt, a maker of commercial kitchen appliances and equipment based in New Port Richey, is slated to be acquired by Illinois-based Middleby Corp, [Photo courtesy of Welbilt]
Published April 21, 2021|Updated April 21, 2021

Welbilt Inc., a New Port Richey company that supplies equipment to restaurants and professional kitchens, is being sold to a global food-service corporation in an all-stock deal worth $4.3 billion.

The deal, announced Wednesday, will see the Illinois-based Middleby Corp. exchange Welbilt shareholders’ stock for Middleby stock at about a 28 percent premium per share. When the deal is complete, Middleby shareholders will own about 74 percent of the combined company and Welbilt shareholders will own about 26 percent. The sale is expected to close in late 2021.

The deal will remove one of Tampa Bay’s 10 largest public companies from market trading — the third time in just over a year that has happened, following the $6 billion sale of Largo’s Tech Data to a private equity firm last summer; and the $17 billion sale of Tampa’s WellCare Health Plans to a St. Louis company in early 2020.

Related: Largo's Tech Data merging with Synnex in $7.2 billion deal

Welbilt came into being in 2016, when a Wisconsin crane company spun its New Port Richey food service arm, then called Manitowoc Foodservice Inc., into its own corporation. A few months after its stock market debut, the company changed its name to Welbilt.

The company doesn’t have the name recognition of other Tampa Bay brands like Raymond James Financial or Bloomin’ Brands, with only about 150 local employees and a low-profile headquarters.

“If you ask most residents, they don’t really know about it,” said Tim McClain, president and CEO of the Greater Pasco Chamber of Commerce. “I would say 99 percent of the population has never seen the front of their building.”

But Welbilt’s local jobs are good ones, McClain said, including corporate-level executives and researchers in the company’s test kitchen. Other companies’ leaders often fly in to see new products in development. Even Welbilt’s temporary job offerings tend to stand out in a crowd, McClain said.

“It’s not uncommon to get an order for them to have someone literally cooking French fries for a week,” said McClain, who owns a staffing company. “It is a real cool, unique environment.”

Like a number of companies in the food service industry, Welbilt had struggled throughout the coronavirus pandemic. In February, the company posted annual net sales of $1.1 billion — down 27.6 percent from 2019 — as well as an overall net loss of $7 million, compared to a net income of $55.9 million the year before. The company had 4,400 employees in December, down from 5,100 the year prior.

Related: Here's how 10 top Tampa Bay companies fared in six months of pandemic business

Middleby had about 9,300 employees in January, including 5,413 in the United States. The company had net sales of $2.5 billion in 2020, down from $2.9 billion in 2019; and net earnings of $207.2 million, down from $352.2 million the year before.

On a call with investors Wednesday morning, Middleby CEO Timothy Fitzgerald said the combined company could see $100 million in savings by cutting overlapping costs in manufacturing, marketing, supply chains and other types of corporate overhead. He and other Middleby and Welbilt executives didn’t offer specifics on how those savings might be achieved.

“The landscape is changing,” Welbilt CEO William Johnson said on the call. “The markets are changing. There’s a lot of innovation required; a lot of digital is coming. And with the combined company, we feel that we’re stronger together, addressing those changes in the marketplace. We really feel that it benefits Welbilt shareholders greatly to have the strength of those combined brain trusts of the companies together.”

Rich Sheffer, the company’s vice president of investor relations and management, said in an email that while the merger may see some “duplication of work” that “may impact positions,” it was too early to say how that might affect staffing.

“From a market perspective, markets are recovering and, as they do, this often can result in the creation of more jobs rather than a reduction in jobs,” Sheffer said. “There are a lot of steps to go through in a deal such as this. Taking care of our people will be front of mind.”

Pasco County commissioner Kathryn Starkey, whose district includes Welbilt’s headquarters, said the company had explored an expansion as recently as 2019. She hoped the new deal might reignite those discussions, potentially luring some manufacturing jobs.

“I would imagine a lot of the players that are here are going to stay here,” Starkey said. “Who knows if we’ll even feel a difference? But it’s a bummer when the Tampa Bay area loses their public companies, and we see that happening more and more.”

Fitzgerald said the deal would help both companies power through the remaining months of the pandemic, both nationally and internationally, and put them in a position to grow going forward.

“The food service industry has proven resilient over the past year, with an underlying strength in consumer demand for restaurants,” Fitzgerald said. “As we emerge from COVID, there is momentum at both Middleby and Welbilt, fueled by a positive outlook for the industry recovering.”

Welbilt stock shot up 44 percent on the Nasdaq composite Wednesday, closing at $22.58 per share. Middleby stock rose 15 percent to $181.99 per share.