Italian group Ali sees shelter from economic storm in Welbilt deal

  • Welbilt has been a target for three decades
  • The new group will have an EBITDA of $750 million before synergies
  • The Italian company is not considering an IPO

MILAN, July 29 (Reuters) – Welbilt’s exposure to the U.S. fast-food market will make new Italian owner Ali Group more resilient in a slowing global economy, while the deal will bring $100 million in savings, said the general manager of catering equipment. company told Reuters.

Completion of the $3.4 billion deal to acquire Welbilt, the largest for an Italian company in the United States in seven years according to Refinitiv, will double America’s contribution to group revenue to 48 %, said CEO Filippo Berti.

The deal was signed last year after a bidding war with biggest rival Middleby (MIDD.O) as Ali sought better access to a booming U.S. fast-food sector, but before supply chain and inflation issues come to the fore.

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“Today, Welbilt is rebalancing our sales to the US market and diversifying our offering during an economic downturn, reducing our investment and currency risks while strengthening our buying power when purchasing stainless steel” , said Berti.

Manufacturing sites in the United States will nearly match those in Italy, where privately held Ali, which makes the Carpigiani ice cream machines used by McDonald’s (MCD.N), has 21 plants.

“Synergies will primarily come from greater geographic penetration and cross-selling opportunities, manufacturing and supply chain optimization, and lower enterprise costs as the business will not be not listed,” Berti told Reuters from his Chicago office.

Berti said Ali, which has seen steady growth through acquisitions and had 2 billion euros ($2 billion) in revenue in 2019, may look for more M&A opportunities. in a few years. He ruled out a possible stock market listing.

HUNGRY FOR MORE

Welbilt owns brands in the United States, including Frymaster fryers, Garland grills and Merrychef ovens.

It was a business that Berti and his Ali founder father had been overseeing since the 1990s when it was part of a London-listed group.

“We have always seen it as a complementary business to ours – European manufacturers typically have ‘slow food’ DNA, they are not used to producing high-performance equipment to maximize cooking in small spaces for example. “, he added.

North America alone accounts for 50% of the foodservice equipment market and is the largest in the industry, he said.

The CEO also said greater exposure to the United States was a hedge against potential fallout from the Ukraine-Russia conflict on business in Europe.

Berti, whose father Luciano started a dishwasher business near Milan in 1963, said the new group would have pro forma annual sales of $3.9 billion in the 12 months to the end June and a base profit (EBITDA) of $750 million before synergy gains. .

With a workforce of 14,000 operating in 34 countries including the United States, Japan and New Zealand, “we are now able to offer a fully equipped kitchen anywhere in the world”, a- he added.

Berti said Ali could get back on the acquisition trail once he digests the deal.

“Our leverage is currently 3.8 times, in a few years when we have reduced the company’s debt, we will start again with targeted acquisitions in the segments where we are weakest,” he said.

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Reporting by Maria Pia Quaglia; Editing by Keith Weir and David Holmes

Our standards: The Thomson Reuters Trust Principles.

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