Catering Insight – Welbilt considers Ali Group’s takeover bid to be “superior”

Welbilt’s board of directors has announced its intention to accept a takeover bid from Ali Group, in the latest development in the battle over the acquisition of the catering equipment maker.

As Middleby Corp first announced its intention to acquire Welbilt in a deal worth US $ 4.3 billion in April, rival Ali Group then entered the fray in May. with a proposal to acquire all of the outstanding common shares of Welbilt for US $ 23 per share in cash.

Last week, the European foodservice conglomerate increased its offering to US $ 24 per share, which it said offers “even greater value than our original proposition.”

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Welbilt has deliberated on the enhanced offer and has now determined that the revised unsolicited proposal constitutes a “Superior Company Proposal,” as defined in its previously announced merger agreement with Middleby Corp.

The board has calculated that the latest offer involves an enterprise value of around $ 4.8 billion. The directors issued a statement saying, “The proposal is binding on the Ali group and can be accepted by Welbilt before July 14, 2021. Closing of the transaction would be subject to the approval of Welbilt shareholders, upon receipt of further approvals. regulatory and other customary closing conditions.

Welbilt therefore notified Middleby of its intention to terminate the merger agreement with the US-headquartered group, giving Middleby five business days to negotiate further amendments to its proposal. If another bid is placed, then Welbilt’s board of directors will need to determine whether this would prevent Ali Group’s proposal from being a “top company proposal”.

For his part, Middleby remained convinced that his initial agreement was superior to the Ali Group proposal, before Welbilt’s latest statement.

In its latest management forecast for investors, the company said: “Middleby believes that its signed definitive agreement provides Welbilt shareholders with a superior value proposition.

“Feedback on the transaction from our equity research analysts has been overwhelmingly positive. Additionally, based on our strong performance and improved outlook, they raised their stand-alone price targets for Middleby shares to an average of $ 210.44, implying a merger consideration value of $ 26.09.

“Our combination of counterparties allows Welbilt shareholders to share in the future benefits of the combination. Through our continuous work, we have a high level of confidence in our ability to meet or exceed the $ 120 million in cost synergies and savings in the business transformation plan identified during our process.

“This synergy opportunity represents additional value of over $ 3.00 per share for Welbilt shareholders. We are increasingly convinced that the combined company will have the ability to better serve its customers and continue to grow at rates above the overall market for years to come. “

Middleby then highlighted the transaction points which he said highlight the superior qualities of his offer: “Our merger proposal will be tax-exempt for Welbilt shareholders. We have nearly two and a half months of engagement with regulatory authorities and have made significant progress towards completing the transaction.

“Our transaction has no financing requirement. The declaration of definitive proxy was declared effective on June 11 and the shareholder vote for Middleby and Welbilt is on July 21, 2021. ”

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