(Bloomberg) -- Welbilt Inc., a U.S. maker of food-service equipment backed by billionaire Carl Icahn, said an offer by Italy’s Ali Group may lead to a superior deal, casting doubt on a rival bid last month.
Milan-based Ali Group, which supplies gelato dispensers and other equipment, said Friday that it offered $3.3 billion in cash for Welbilt, or $23 a share. It’s seeking to outbid Middleby Corp., which last month agreed to buy Welbilt for about $2.9 billion, or 0.124 Middleby share for each Welbilt stock.
Ali said it has “substantial” cash on hand and has received a commitment from Goldman Sachs Group Inc. for new financing to fund the transaction. Welbilt’s board held a virtual meeting Friday with its senior management team, Morgan Stanley and Gibson Dunn to examine the offer. Icahn is Welbilt’s largest shareholder, according to Bloomberg data.
Welbilt confirmed the Ali Group bid in a proxy statement filed Friday following a report in an Italian newspaper, as well as the Wall Street Journal. The stock jumped 24% to close at $24.71 on Friday, a record. Middleby dropped 1.9% to $164.28, which would value its offer for Welbilt shares at $20.37 apiece.
Welbilt shares jumped as Mircea Dobre, a Robert W. Baird analyst, projected that Middleby will likely have to adjust its offer to remain competitive. “Our best guess is that they will add a cash component to the current bid, we see as much as $7/share as feasible (implies a ~$27/share offer),” Dobre said.
Middleby called Ali Group’s offer “highly opportunistic,” and said that unlike its Italian rival, the regulatory approval process is already underway for its proposal.
“We believe that the combination of Middleby and Welbilt can be completed with a high degree of certainty and deliver superior value to Welbilt’s shareholders,” said Tim FitzGerald, Middleby’s chief executive officer. “Ali Group’s non-binding proposal has a number of conditions, challenges and risks.”
Goldman Sachs is serving as Ali Group’s financial adviser.
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