The CEO of Manitowoc believes there is room for a “globally-strong” foodservice equipment player to emerge from the handful of large groups that currently dominate the industry, and suggests the supplier side of the market will undergo further extensive consolidation.
Hubertus Muehlhaeuser, who has just presided over Manitowoc Foodservice’s successful public listing as a standalone business, expects large competitors such as the Ali Group, Middleby and ITW to continue raiding their war-chests in order to expand.
In an interview with FEJ on his recent visit to London, Muehlhaeuser said: “I would expect to see Middleby continuing to acquire. I think they have weaknesses on the cold side and they will address that. And the same goes for ITW. So four to five years down the road you are going to have pretty much the same big players, but they are going to have a broader portfolio. And perhaps you are going to have a couple of large companies merging together. I am a firm believer that the foodservice industry is ripe enough to have one global leader because we do not have that yet.”
While some analysts have speculated that Manitowoc Foodservice itself could be an attractive acquisition target since becoming an independent company, Muehlhaeuser said he very much regards the company as being “a consolidator and not the consolidatee”.
“I don’t think that we are in play, but it always depends on the price of course because if you are a publicly-traded company then it is a free market,” he commented. “As I said, there is room for a couple of big companies to get together. Is there room for two strong American companies to get together? Most likely not because you then have to divest and we went through that pain with Scotsman. We paid a fortune prior to the crisis and then had to give it away for free after the crisis.
“We are one of the largest companies in the industry and if a strong American one came in the amount of business that you would have to divest to avoid becoming too dominant might be significant. But a strong European one with a strong American one, or a strong Asian one, yes, why not? I like the idea. If you put your ego behind you, I like the concept of building a globally strong company and that is what we want to do.”
With sales of more than £1 billion a year and 23 brands in its portfolio, Manitowoc is one of the biggest names in the business. And Muehlhaeuser confirmed that acquisitions do feature in his thinking, so long as they add shareholder and customer value.
“Short term we are just emerging from the point of becoming an independent company, so we have got to learn to crawl, then walk, and then run. We are at the crawling stage now as an independent firm, so give us a couple of months to get comfortable with that and then let’s reduce our debt a little bit and work on our profitability. Towards the end of this year and the beginning of next year is when you are going to see us involved with smaller buy-and-builds because I think we have a couple of gaps that we would like to fill.”
Muehlhaeuser suggested that the company was more likely to turn to acquisition to fill gaps in its local or regional portfolio, such as in Europe where not every North American product in its portfolio necessarily lends itself to the continental market. “I think we are under-represented on the cold side in Europe and we will invest there for sure,” he said.