July 6 Update 4 p.m.
Earlier today, Middleby Corp. released its second-quarter earnings report and updated its outlook for the company’s 2021 fiscal year performance. In doing so, Middleby reiterated that its offer to acquire Welbilt represents significant value for Welbilt shareholders for a variety of reasons. Middleby said its deal would generate $26.04 per share for Welbilt shareholders. Other reasons Middleby feels its offer is valuable includes the fact that the merger will be tax-free to Welbilt shareholders, Middleby has almost two and a half months working with regulatory authorities on the deal and the Middleby deal has no financing requirement.
For its part, Welbilt issued a statement on July 6 saying it had received a “revised unsolicited proposal” from Ali Group and its board of directors is evaluating it. As part of the statement, Welbilt added, “In accordance with the terms of the Pending Merger Agreement and in accordance with its fiduciary duties, Welbilt’s board of eirectors is carefully evaluating the Revised Unsolicited Proposal in consultation with its financial and legal advisors and will pursue the course of action that the board of directors believes is in the best interest of Welbilt and its stockholders. Welbilt’s board of directors has not made any determination as to whether the Revised Unsolicited Proposal constitutes a “Company Superior Proposal” under the terms of the Pending Merger Agreement. Welbilt shareholders need take no action at this time.”
Ali Group has sweetened its offer to acquire foodservice equipment manufacturer Welbilt to $24 in cash per outstanding share from the original offer of $23 per share made on May 28.
In addition, Ali Group says the company has obtained fully underwritten, binding commitment letters for debt financing from Goldman Sachs International and Mediobanca. The latest Ali Group proposal also provides a “hell or high water” provision, which requires the Italian company to take all actions necessary, including divestitures, to obtain all requisite antitrust approvals without undue delay.
Per an Ali Group release, this latest offer represents a premium of 3.5% to the Welbilt closing share price on July 2, 2021, the last trading day prior to the July 5, 2021 definitive proposal. Ali Group is not the only company to make an offer to acquire Welbilt. The ball got rolling back in April when Middleby made an offer to acquire Welbilt that had an implied enterprise value of $4.3 billion at the time, per a Middleby release.
Ali Group says the company’s latest offer represents “a premium of approximately 11.4% to the implied value of the all-stock transaction with The Middleby Corporation as of July 2, 2021, the last trading day prior to Ali Group submitting its proposal to Welbilt, and a premium of 53.6% to the closing share price on April 20, 2021, the last trading day prior to announcement of the Middleby Transaction.
In a statement Ali Group says, “We are pleased to present the Welbilt board of directors with the compelling, certain and upfront value of our fully financed, all-cash offer to acquire Welbilt for $24.00 per share, which provides even greater value than our initial proposal and includes the certainty of a “hell or high water” provision. Ali Group has completed due diligence and secured committed financing, and our proposal continues to be superior in every respect to Welbilt’s pending all-stock transaction with Middleby, with a significant premium to Welbilt shareholders and a clear path to completion. Further, given the minimal product overlap between our two companies and the fact that our proposed transaction does not require an Ali Group stockholder vote, we believe our proposal offers far greater certainty of closing than the Middleby Transaction.
“We firmly believe our proposal represents the most attractive opportunity for Welbilt shareholders and expect the Welbilt Board of Directors to deem our all-cash proposal superior to the pending all-stock transaction with Middleby. We have long admired Welbilt’s heritage, breadth of products, brand strength and management team, and look forward to executing a definitive merger agreement, welcoming Welbilt and its employees to the Ali Group family and creating an industry leader with a comprehensive product portfolio and global footprint.”