Welbilt says Ali Group $3.3 billion bid likely better than Middleby deal

(Reuters) -Welbilt Inc said late Friday that a $3.3 billion offer from Italian rival Ali Group to acquire the U.S. foodservice equipment maker was likely superior to its existing tie-up agreement with Middleby Corp.

The decision would allow Welbilt to negotiate a deal with Ali Group and terminate the Middleby transaction, although Welbilt shares rose past the Ali Group offer price, indicating some shareholders expect Middleby may sweeten its offer.

In a regulatory filing, Welbilt said its board had met earlier in the day and decided the Ali Group offer “constitutes or is reasonably likely to constitute” a superior proposal.

Ali Group has offered $23 for each Welbilt share, representing a premium of 15.5% to the Welbilt closing price on Thursday.

Welbilt shares closed at a record high of $24.71 after the move by privately-owned Ali Group.

The bid trumps a $2.9 billion all-stock offer for Welbilt put forward by Middleby. Activist investor Carl Icahn, Welbilt’s largest shareholder with an 8.4% stake, had agreed to that deal.

“Middleby remains firmly committed to seeing our proposed merger with Welbilt through,” Middleby Chief Executive Tim FitzGerald said in a statement, adding that Ali Group’s proposal had a number of conditions which meant its existing tie-up had greater certainty of closing.

Middleby stands to receive a $110 million break-up fee from Welbilt if it decides not to sweeten its offer.

Ali Group said it was confident the bid would obtain the necessary regulatory approvals without the uncertainty of antitrust concerns as in the case of the Middleby agreement.

“Our $23 per share proposal ... is superior in every respect to Welbilt’s pending all-stock transaction with Middleby,” the company said in a statement.

Ali Group said it had received a letter from Goldman Sachs International for new financing to fund the proposed deal.

Based near Milan, Ali Group, with 80 brands, operates worldwide and supplies foodservice equipment to businesses ranging from hotels to schools and supermarkets.

Reporting by Maria Pia Quaglia, Sanjana Shivdas and David French; editing by Giselda Vagnoni, Keith Weir and Krishna Chandra Eluri