A late entry appears to have won the bidding war to acquire Welbilt.
The New Port Richey restaurant and professional kitchen equipment supplier has decided that a $3.5 billion cash offer from Italian holding company the Ali Group is a better deal than Midwestern competitor Middleby Corp.’s proposal worth $4.8 billion in stock and debt.
Welbilt has until Wednesday to officially accept the Ali Group’s deal. But Middleby announced Tuesday that it will not increase its offer, therefore allowing their proposed merger agreement to expire.
“Middleby has declined to increase their bid and expects the agreement to terminate,” Rich Sheffer, Welbilt’s vice president of investor relations and management, said in an email.
Sheffer said Welbilt would have to pay Middleby a $110 million agreement termination fee.
“As we considered our options over the course of the match period, we concluded to deploy our substantial financial resources wisely,” Middleby CEO Timothy FitzGerald said in a statement. “As a seasoned acquirer, we remain disciplined and committed to ensuring the best outcome for our Middleby shareholders.”
This isn’t the outcome Welbilt and Middleby expected when they announced their initial deal, then worth $4.3 billion, in mid-April. The Ali Group’s unsolicited bid came along a few weeks later, leading both companies to up their proposals.
On July 6, Welbilt’s board of directors decided the Ali Group’s offer, representing a price $24 per share — up from $23 per share initially — was more favorable to its shareholders. Welbilt then notified Middleby that it intends to terminate their original deal and enter a new one with the Ali Group.
Any final deal must be approved by Welbilt’s board of directors, as well as shareholders and regulators.
In a statement last week, the Ali Group wrote that its “minimal product overlap” with Welbilt would help make that deal more likely to sail through than the proposed Middleby merger.
“We have long admired Welbilt’s heritage, breadth of products, brand strength and management team, and look forward to executing a definitive merger agreement,” the Ali Group stated.
With Welbilt in the rear view, Middleby is moving ahead with its acquisitions. The company on Monday announced it was purchasing a Belgian manufacturer of residential stove hoods and cooktops with annual sales of $90 million. Terms of that deal were not immediately disclosed.
This is a developing story and will be updated. Check back for updates.