Elgin / IL. (tmc) The Middleby Corporation reiterated its commitment to completing its proposed merger with Welbilt Inc., in face of the unsolicited and non-binding indication of interest from Ali Holding SRL (see below). The proposed merger between Middleby and Welbilt, announced in April, will create a strong Commercial Foodservice platform with an attractive portfolio of products, brands and technologies. Middleby highlights that it has a definitive agreement to acquire Welbilt, and the regulatory approval process is underway. Furthermore, Middleby and Welbilt filed their preliminary joint proxy statement / prospectus on Form S4 with the SEC in connection with obtaining required shareholder approvals.
«Middleby remains firmly committed to seeing our proposed merger with Welbilt through,» said Tim FitzGerald, Middleby CEO. «The Ali Group’s non-binding indication is highly opportunistic and conditional. We believe that the combination of Middleby and Welbilt can be completed with a high degree of certainty and deliver superior value to Welbilt’s shareholders. Ali Group’s non-binding proposal has a number of conditions, challenges and risks, all of which increase the uncertainty of achieving a completed transaction.»
Tim FitzGerald also added, «we have strong confidence that the value of the proposed Middleby/Welbilt merger is far superior to Welbilt’s shareholders, allowing them to participate in the combined entity’s future growth, realization of synergies, and our industry’s continued recovery from the Covid-19 pandemic. These upside opportunities are evidenced by the broker price targets for our company, the majority of which point to a significantly higher value to Welbilt’s shareholders. Through our diligence process, we have built a working relationship with the Welbilt team and believe that our organizations have a strong cultural alignment, which will benefit both organizations in the long-term. Our proposed merger is also in the best interest of not only both companies’ shareholders, but our customers, employees, distributors and other stakeholders.»
In Summary, Middleby’s Offer Comprises a Superior Proposal to Welbilt Shareholders:
- Value: Ali Group’s indication is opportunistic given Middleby’s recent trading, but Middleby’s proposal is clearly superior in value to Welbilt shareholders
- Upside Participation: The Middleby transaction provides Welbilt shareholders the opportunity to participate in future upside and the long-term growth of the combined company
- Synergies: We believe the clearly identified USD 120 million of synergies and operational improvements deliver substantial value to Welbilt’s shareholders
- Timing: Middleby has completed its diligence and the shareholder and regulatory approval processes are already underway, all of which Ali Group has yet to begin; Middleby and Welbilt have additionally filed their preliminary joint proxy statement/prospectus with the SEC
- Financing: There is uncertainty around the financing (and the terms of any such financing) that Ali Group would need to obtain to fund the proposed transaction. On the other hand, Middleby’s definitive agreement contains no financing conditions, and the combined company will maintain significant balance sheet capacity to pursue other value accretive investments benefiting both Middleby and Welbilt shareholders
- Certainty: There is significantly more uncertainty and risk associated with Ali Group’s proposal for Welbilt’s shareholders
Financing and Expected Timing: Middleby intends to refinance Welbilt’s existing debt through its committed Senior Secured Facility. Based on the expected pro forma leverage ratio at closing, the interest on the incremental financing would be approximately L + 162.5 bps. The transaction is expected to close in late 2021, subject to customary closing conditions, including regulatory and Middleby and Welbilt shareholder approvals.
Ali Group Confirms Proposal to Acquire Welbilt
Chicago / IL. (ahs) In response to media reports, Ali Holding SRL, one of the largest and most diversified global leaders in the foodservice equipment industry, on May 28 confirmed that on May 25, 2021, it submitted to the Board of Directors of Welbilt Inc. a proposal under which Ali Group would acquire all of the outstanding shares of Welbilt common stock for USD 23.00 per share in cash. This proposal represents a premium of 47.2 percent to the Welbilt share price as of April 20, 2021, the last trading day prior to The Middleby Corporation’s announcement of its pending all-stock transaction with Welbilt, and a premium of approximately 13.9 percent to the implied value of the Middleby transaction as of May 24, 2021, the last trading day prior to Ali Group submitting its proposal to Welbilt.
Ali Group has substantial cash on hand and has received a Highly Confident Letter from Goldman Sachs International for new financing to fund the proposed transaction. Ali Group will obtain fully underwritten, binding commitment letters for any debt financing prior to signing a definitive merger agreement, which will not contain any financing condition. Ali Group is also highly confident its proposed transaction will obtain all necessary regulatory approvals in a timely manner without the uncertainty created by the antitrust provisions contained in the Middleby transaction.
Ali Group issued the following statement: Ali Group has a 60-year history in the foodservice equipment sector and has long-admired Welbilt. Our USD 23 per share proposal delivers significant cash premium value to Welbilt shareholders and is superior in every respect to Welbilt’s pending all-stock transaction with Middleby. In addition to superior value, our proposal offers greater certainty of closing for Welbilt and its shareholders. We and our advisors look forward to engaging with Welbilt and its advisors to quickly negotiate and finalize a definitive agreement.
