Foodservice equipment manufacturer Middleby Corp announced it has entered into a definitive agreement under which it would acquire rival Welbilt Inc. (WBT), in an all stock deal with an implied enterprise value of $4.3 billion. Each Welbilt shareholder will get a fixed exchange ratio of 0.1240x shares of Middleby common stock for each unit of Welbilt common stock. Welbilt stock surged immensely adjacent to the news.
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Welbilt Inc. (WBT) shares soared 22.52% to trade at $19.15 in premarket at last check. WBT’s stock closed the last session at $15.63, declining -0.19% or -$0.03. Shares of the company were fluctuating between $15.1723 and $15.83 throughout the day. For the last six months, the stock has gained a total of 127.51%, and over the last three months, the stock has increased by 8.39%
About the definitive agreement.
This transaction has brought two complementary businesses, which will accelerate company growth and further increase market penetration in extremely lucrative segments. Both the companies will have approximately $3.7 billion in combined sales for 2020 with 73% of the total sales, primarily the result of the commercial foodservice, in accordance to the joint statement by the companies.
The current offer in which, Welbilt shareholders will receive 0.1240 shares of Middleby for each unit accounts for $20.68 per Welbilt share, generating a premium of 32% to the company’s closing price on Tuesday. 76% ownership of the combined company will include Middleby investors, whereas the rest of the company will be owned by Welbilt shareholders
The combined companies aim to strategically strengthen customer value proposition and establish a platform with enhanced ability to serve customers due to the complementary nature of their business. Furthermore, the transaction increases research and development as well as investment into the value-added technologies, to keep up with consumer orientation.
After the completion, Timothy FitzGerald will remain CEO and a member of the Middleby Board of Directors. Bryan Mittelman will also continue to serve as Middleby’s Chief Financial Officer. Middleby Board will now consist of two new directors from the Welbilt board, Chairperson CynthiaEgnotovich, and William Johnson.
Welbilt offers a better-than-expected outlook for the current quarter and anticipates sales and profits to grow for the full year after being acquired by Middleby. The combined companies, aim to expand their international operations and invest heavily in product development. Hence the synergy between the company’s peaked investor interest with WBT stock rising substantially after the announcement.