Why Welbilt’s stock rose 24% on Friday
Back in April, shares of a commercial food service company Welbilt (NYSE: WBT) jumped after announcing its intention to be acquired by a larger competitor Middleby (NASDAQ: MIDD). At the time, investors believed the combination that would create a leading supplier of kitchen equipment to the commercial catering industry was good for shareholders of both companies, and shares of both companies emerged.
But today, Welbilt shares climbed 24%, after Reuters reported that Italian catering equipment company Ali Group was trying to outbid Middleby.
Image source: Getty Images.
Although neither company has commented to confirm, Ali Group made an all-cash offer to buy the company for $ 23 a share earlier this week, according to the report. That values the catering equipment maker at around $ 3.3 billion, according to the report. It is competing with Middleby’s all-stock bid which amounted to $ 4.3 billion, including debt. This figure represented a 28% premium over the 30-day average Welbilt share price at the time.
Excluding debt, Ali Group’s $ 3.3 billion offer compares to Middleby’s $ 2.9 billion. But including debt, Middleby’s bid raised the valuation to the equivalent of $ 4.3 billion.
Details of Ali Group’s potential offer have not been released, but investors today pushed Welbilt shares past the value of $ 23 per share, anticipating a possible bidding war, it seems.
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Selim Bassoul, former CEO, President and Chairman of Middleby, is Chief Innovation Officer at The Motley Fool. Howard Smith owns shares in Middleby. The Motley Fool owns stocks and recommends Middleby. The Motley Fool has a disclosure policy.
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