ITW bids $2 billion for appliance maker
Illinois Tool Works on Thursday swooped in with a $2 billion bid for a restaurant equipment maker in Britain that Elgin-based Middleby Corp. unsuccessfully bid for last year.
The transaction would mark Glenview-based Illinois Tool's largest acquisition since it bought Premark International, the maker of Wilsonart and Hobart brands, for $3 billion in 1999, spokeswoman Alison Donnelly said.
The company usually targets small companies with annual sales of less than $100 million.
ITW targeted restaurant equipment manufacturer Enodis PLC, which has accepted its bid despite having agreed last month to be acquired for less by Wisconsin-based Manitowoc Co.
However, investors appeared to bet a fight could develop for control of Enodis, which supplies fryer systems to restaurants, including Oak Brook-based McDonald's Corp.
Investors bid Enodis shares above the new offer price in a sign that they expect a higher bid. The offer from Illinois Tool represents a premium of 8.5 percent to the Manitowoc bid.
Enodis shares traded up 78 cents, or 16.2 percent, to $5.58. That price is above the price of ITW is offering.
Manitowoc's bid is $5.09 a share.
Enodis's brands include Lincoln ovens, and McDonald's last month selected its Garland-brand double-sided grills for its restaurants.
Its customized worktops feature high-speed toaster ovens and refrigerated holders for ingredients that allow McDonald's to assemble made-to-order deli sandwiches in less than a minute.
David Larkam at Arden Partners said the bid is an obvious sign of the quality of Enodis' stock, and this may convince Manitowoc to come in with another bid.
Middleby said in October it had been interested in buying the company but was no longer planning to make another offer for Enodis.
In a joint statement, Enodis and ITW said that the transaction will create an industry leader in food-service equipment. The offer from Illinois Tool, which is recommended by Enodis' directors, is conditional on ITW obtaining antitrust clearance from European Union and U.S. regulators by Nov. 4.
Enodis has manufacturing facilities in North America, Europe and Asia, and employs 6,800 workers. The company generates 71 percent of its revenue in the Americas.
ITW's food-equipment business comprises washing equipment, cooking and food processing equipment, refrigeration equipment and ventilation and pollution control systems.
ITW employs 60,000 workers in 52 countries.
"We believe that the combination of ITW food equipment and Enodis will create an expanded global food-equipment platform with very complementary strategic, operational and geographical growth positions," said ITW Chairman and Chief Executive Officer David Speer.
ITW offers Enodis investors a speedier takeover. It plans to complete the takeover in the summer, whereas Manitowoc faced an antitrust investigation given its dominance in the $700 million U.S. ice-machine market, analysts said.
Enodis' annual profit rose 4.9 percent to 41 million pounds after raising prices to compensate for the higher cost of steel and aluminum. Sales added 4.7 percent.
Enodis CEO Dave McCulloch planned to cut jobs and revamp some European and Asian units to offset a North American slowdown.
The stove maker introduced more than 100 new products last year, including Pearl Ice machines, Lincoln Fastbake ovens and Avenger dishwashing units.
It won an order to supply 28,000 Subway sandwich shops worldwide with its Merrychef 402 high-speed ovens, which bake food 15 times faster than conventional cookers.