In a deal that unites two publicly traded foodservice equipment manufacturers, The Middleby Corporation will acquire Welbilt in an all-stock transaction. The deal is expected to close by the end of 2021. The boards of directors for both companies have approved this deal, per a Middleby release.
The combined company will have approximately $3.7 billion in combined 2020 sales, 73% of which will come from the commercial foodservice segment, per a release announcing the deal.
Following the closing, Timothy FitzGerald will continue as CEO and as a member of Middleby’s board of directors. Bryan Mittelman will continue to serve as Middleby’s chief financial officer. Middleby will expand its board of directors to include two new directors from the Welbilt board: chairperson Cynthia Egnotovich and William Johnson, who serves as Welbilt president and CEO. Johnson joined Welbilt in November 2018, replacing Hubertus Mühlhäuser.
Under the terms of the agreement, Welbilt shareholders will receive a fixed exchange ratio of 0.1240x shares of Middleby common stock for each share of Welbilt common stock in an all-stock transaction, with an implied enterprise value of $4.3 billion. Based on Middleby’s volume-weighted average price during the 30 consecutive trading days ending April 20, 2021 (Middleby’s 30-day VWAP), the offer price represents a 28% premium to Welbilt’s 30-day VWAP. Upon closing, Middleby shareholders will own approximately 76% and Welbilt shareholders will own approximately 24% of the combined company on a fully diluted basis.
Middleby is no stranger to acquiring and integrating companies into its business. Since 2018 the multiline foodservice equipment manufacturer has completed more than 20 acquisitions, per a company release. As a result of the deal, Middleby expects to realize $100 million of annual cost synergies associated with the transaction by year three, “with additional potential from cross-selling opportunities and greater product development not yet quantified.”
Middleby’s more recent deals include the December 2020 acquisition of Zhuhai Guangdong China-based United Foodservice Equipment Group and the June 2019 acquisition of Ss Brewtech, a manufacturer of crafting brewing and beverage equipment. And in February 2019, Middleby acquired Standex Cooking Solutions Group.
The deal will represent the latest in a long line of transitional moments for the collection of foodservice equipment brands that combine to form Welbilt. In April of 2008, Manitowoc, which then had its cranes and ice machine business, announced the acquisition of the Enodis Companies, which included such brands as Garland, Cleveland, Lincoln, Merrychef, Frymaster, Delfield, Kolpak, Scotsman and Ice-O-Matic. To gain governmental approval for the deal, Manitowoc was required to sell Ice-O-Matic and Scotsman, which it did, to investment firm Warburg Pincus in May of 2009. Warburg Pincus eventually sold Ice-O-Matic and Scotsman to their current owners, Ali Group, in November 2012.
In March 2016, The Manitowoc Company separated its foodservice business from its crane business, creating an independent, publicly traded company that goes to market as Manitowoc Foodservice. And in March 2017 Manitowoc Foodservice was renamed Welbilt.