Middleby acquires U.K. stovemaker Aga

Elgin-based Middleby Corp. agreed to buy Aga Rangemaster Group Plc for 129 million pounds ($202 million) after the British ovenmaker's pension liabilities thwarted its ambitions to expand.

Shares of the U.K. company surged as much as 20 percent in London after Middleby said it will pay 185 pence a share in a cash deal that puts Aga stoves in the same camp as Viking ovens.

Becoming part of Middleby, whose stable of more than 40 brands also includes commercial kitchen-equipment maker Lincat, provides Aga with a means to escape the pension burden that has hampered its progress in recent years. The company's funding deficit was 69 million pounds in its last financial year, about as much as its market value before Aga announced in June that it had received an approach from Middleby.

"Middleby provides a larger scale framework including an established international structure to deliver fully on the potential of the business," Aga Chairman John Coleman said in the statement. "The financial strength of Middleby also achieves a better balance with Aga's pension obligations."

Aga's pension commitment has constrained resources, holding back the growth of its brands. Joining Middleby will provide access to wider distribution channels and increase sales growth in North America, it said. Currently, about two-thirds of revenue is generated in the U.K.

For Middleby, the acquisition will provide "meaningful growth opportunities," Chief Executive Officer Selim Bassoul said in the statement. Middleby has spent about $2.8 billion on deals since Bassoul took over as CEO in 2004. Its stock price has jumped more than tenfold in that period, valuing the Elgin-based company at about $6.8 billion.

Shareholders owning 19.1 percent of Leamington Spa, England-based Aga have already approved the takeover, the companies said. Aga was advised by Rothschild and Numis, while Morgan Stanley acted for Middleby. Lincoln Pensions provided advice to the Aga pension program.