The Middleby Corporation said it does not plan to increase its offer for Welbilt – paving the way for rival Ali Group to acquire the business instead.
Ali Group submitted an improved cash bid of $24 per share last week, leaving Middleby with five days to negotiate a new deal.
But Middleby said last night that it has no intention of submitting an offer that would trump Ali Group’s $3.41 billion proposal.
Instead it has let the negotiation period expire and said it would turn its sights to other M&A targets instead.
Timothy FitzGerald, CEO of Middleby, said: “We believe that the previously agreed terms of the merger agreement between Middleby and Welbilt offered significant long-term strategic value to the Welbilt shareholders through the ability to participate in substantial upside opportunity from Middleby’s continued growth, while remaining attractive to our existing Middleby shareholders.
“As we considered our options over the course of the match period, we concluded to deploy our substantial financial resources wisely. We are excited about the momentum of our business and future prospects of our three industry leading foodservice platforms. As a seasoned acquirer, we remain disciplined and committed to ensuring the best outcome for our Middleby shareholders.”
In accordance with the terms of the merger agreement, Welbilt will have to pay Middleby $110m to terminate the deal although reports said this would be funded by Ali Group.
Mr FitzGerald said: “The additional cash infusion Middleby stands to receive upon termination will put us in an even better position to execute on our existing M&A growth strategy, as we continue to build upon on our long-standing track record of value-creating deals.”
Middleby has completed more than 20 acquisitions in the last three years and said it has a history of “successfully integrating businesses and realizing significant synergies at the acquired companies”.
Mr FitzGerald added: “Looking ahead, we remain highly confident in our ability to drive continued growth and profitability and believe we are uniquely positioned to deliver superior value creation for our shareholders.”
The deal between Ali Group and Welbilt will be one of the biggest that the catering equipment industry has ever seen, creating a group with a 14,000-strong workforce and a presence in more than 30 countries.
It will also see brands such as Merrychef, Convotherm, Frymaster and Garland brought into the Ali Group stable, where they are expected to be run with the autonomy that the Milan-based business affords to its other businesses.