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Why Welbilt Stock Popped 24% Friday

By Howard Smith - May 28, 2021 at 6:12PM

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The company may soon be the subject of a bidding war.

What happened

Back in April, shares of commercial foodservice company Welbilt (WBT) jumped after it announced plans to be acquired by larger competitor Middleby (MIDD -2.95%). At the time, investors thought the combination that would create a kitchen equipment supply leader in the commercial foodservice space was a good one for shareholders of both companies, and shares of both companies popped.

But today, shares of Welbilt soared 24%, after Reuters reported that Italian foodservice equipment company Ali Group is attempting to outbid Middleby.

Green arrow showing stock rising.

Image source: Getty Images.

So what

Though neither company has commented to confirm, Ali Group made an all-cash offer to buy the company for $23 a share earlier this week, the report said. That values the food-service equipment maker at about $3.3 billion, according to the report. It competes with Middleby's all-stock offer that represented an amount equal to $4.3 billion, including debt. The figure represented a 28% premium to Welbilt's 30-day average share price at the time.

Now what

Excluding debt, the Ali Group offer of $3.3 billion compares to $2.9 billion from Middleby. But including debt, the Middleby offer brought the valuation to the equivalent of $4.3 billion. 

The details of the potential Ali Group offer haven't been released, but investors today drove shares of Welbilt up beyond the $23 per share value, anticipating a potential bidding war, it seems.

 

Selim Bassoul, former CEO, chairman, and president of Middleby, serves as Chief Innovator at The Motley Fool. Howard Smith owns shares of Middleby. The Motley Fool owns shares of and recommends Middleby. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Welbilt, Inc. Stock Quote
Welbilt, Inc.
WBT
The Middleby Corporation Stock Quote
The Middleby Corporation
MIDD
$154.16 (-2.95%) $-4.69

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