- Catering equipment maker offers $ 3.4 billion to Welbilt
- Offer cheated by rival Middleby
- Represents the largest Italian-American contract in seven years
- The deal will double Ali Group’s exposure to the US market
- The fast food industry has shown resilience during the pandemic
MILAN, July 14 (Reuters) – Italian family-owned Ali Group expects its plan to buy American catering equipment rival Welbilt to boost sales as Americans’ appetite for take-out and meal delivery is spurring the resurgence of the US fast food market, the company told Reuters.
Welbilt, which makes high-speed fryers and ovens for quick-service restaurants (QSRs) and is backed by billionaire activist investor Carl Icahn, said last week that Ali’s softened take-over bid Group was superior to its existing deal with its biggest rival Middleby Corp (MIDD .O). Read more
On Tuesday, Middleby said it had no plans to increase its supply, ending the months-long feud between the world’s largest catering equipment companies.
Unlisted Ali Group, which produces the Carpigiani ice machines that are among the ice machines used by McDonald’s, told Reuters the proposed deal would create an industry giant with $ 3.5 billion in revenue. dollars.
It would be the biggest contract for an Italian company in the United States in seven years, according to data from Refinitiv, creating a group of 14,000 employees operating in 34 countries, including the United States, Japan and New Zealand.
Ali Group said it couldn’t pass up the opportunity to acquire brands such as Frymaster fryers, Garland grills and Merrychef ovens, which quickly deliver fresh and hot food on demand to the United States.
Icahn is Welbilt’s largest shareholder with an 8.4% stake, worth just over $ 286 million based on Ali Group’s $ 24 per share offering.
âWe joined the board and helped bring in the right kind of management,â Icahn said in a telephone interview. “It’s activism that works extremely well. A year ago this action was $ 6.50 and now it’s $ 24.”
“The transaction would roughly double our share of overall sales in the fast food segment from the current 10-15%, while nearly doubling our presence in North America,” the company told Reuters, publicly revealing his strategy for the first time.
He also said the U.S. fast food market has weathered the COVID-19 pandemic better than other hospitality sectors thanks to strong demand for food delivery during shutdowns.
Miller Pulse data from early March through mid-May shows average weekly sales for U.S. restaurants are up nearly 15% from 2019 average levels.
“For Ali Group, this is a growth opportunity in North America,” Barclays analyst Adam Seiden told Reuters last week.
âIt’s a very fragmented market and Welbilt is one of the few companies with a global reach, a product portfolio spanning both hot and cold equipment and large chain customer relationships. “
North America is the largest market for catering equipment, according to consulting firm Aaron Allen & Associates.
The battle for Welbilt escalated as the hospitality industry and its suppliers began to recover from the pandemic, which the National Restaurant Association says has closed as many as 110,000 American restaurants, either temporarily or permanently.
Webilt posted a net loss of $ 7.4 million last year, after reporting a net profit of $ 55.9 million the year before.
Ali Group said it was cautiously positive for years to come, having achieved 4% organic growth before the pandemic.
Established in 1963 when founder Luciano Berti started a dishwasher business near Milan, the Ali group has grown steadily through acquisitions and achieved a turnover of 2 billion euros (2, $ 36 billion) in 2019, according to the company.
Among renowned customers, Ali supplies Starbucks (SBUX.O) and luxury hotel chains such as the Four Seasons as well as hospitals, airports, coffee shops and ice cream parlors.
In a research note on the deal, Barclays analyst Seiden said Ali Group, despite having a net cash position of 573 million euros ($ 680.32 million) last August, is expected to grow. take on debt as it has not done in the company’s recent past.
Ali Group announced that it had secured financing from Goldman Sachs (GS.N) and Italian Mediobanca (MDBI.MI).
As part of its winning bid, the group will also pay the $ 110 million breakage fee Webilt owes Middleby for abandoning their previous deal.
($ 1 = â¬ 0.8466)
Reporting by Maria Pia Quaglia Additional reporting by Sanjana Shivdas in Bengaluru and Hilary Russ in New York Editing by Josephine Mason and David Goodman
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