- Middleby plans to acquire Welbilt in a $2.9 billion all-stock deal.
- Welbilt shareholders will receive 0.1240 shares of Middleby common stock for each share held.
- Welbilt stock jumped as much as 40% on Wednesday after news of the Middleby acquisition broke.
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Welbilt shareholders will receive a fixed exchange ratio of 0.1240x shares of Middleby common stock for each share of Welbilt in the deal which is expected to close in late 2021.
The offer price represents a 28% premium to Welbilt’s 30-day volume-weighted average price.
Both companies’ boards have unanimously approved the transaction with Carl Icahn, Welbilt’s largest shareholder with an 8.4% position, entering into a support agreement in favor of the transaction.
“Today’s announcement represents a milestone event for Middleby, Welbilt, and the Commercial Foodservice Equipment industry,” Timothy Fitzgerald, Middleby’s CEO, said of the acquisition.
“The combination of our two great companies creates a leading player with a comprehensive product line, global footprint, and advanced technologies and solutions that are well-positioned to serve our rapidly changing customer needs and capitalize on emerging industry trends,” Fitzgerald added.
After the deal goes through, Middleby shareholders will own about 76% of the combined entity, with Welbilt shareholders owning the remaining 24%.
The combined company will have $3.7 billion in 2020 sales and Middleby expects $100 million of annual cost synergies associated with the transaction to be fully realized within three years.
The law firm Johnson Fistel is investigating whether the proposed deal represents adequate consideration given analysts’ projections for future earnings and revenue growth.
Welbilt stock traded up 36.60% as of 12:18 p.m. ET, while Middleby stock traded up 5.88%.