If everything goes to plan, Middleby and Welbilt will merge operations by the end of 2021 to create a foodservice equipment powerhouse with combined annual revenues of $3.7 billion (£2.7 billion).
While it is still too early to say what it will all mean on a localised level, operators, distributors and consultants have been giving their reaction to the news over the past 24 hours.
Mike Faers, CEO and founder of the FIS Group, which works with many leading restaurant brands on menu innovation and new product development, would like to see the tie-up result in even better equipment solutions for operators further down the line.
“It is a significant deal within a crucial area of our industry and I am hopeful that it will result in re-energised innovation to support the operators in navigating the challenges they are facing. It would be great to see small footprint, low utility and automated solutions in the combined innovation pipes.
“For me, the jury is out on whether this is a good thing – it depends on the intent as I am a firm believer in M&A to drive increased customer benefits but I am hopeful we will see the innovation launch. We also have some excellent specialist businesses in areas like combination ovens (Rational) and refrigeration (Adande) to ensure customers have choice.”
Leading chef and F&B consultant, John Benson-Smith, also hopes that the combined engineering might of the two entities will lead to tangible benefits for equipment buyers.
He said: “What I really enjoy is that from my experience Middleby listens to the end-user operator – when unfortunately so many do not – and a chunk of [the business] is made, built and designed in the UK. I would argue that there are too many brands in a crowded market with too much choice and only a limited number of manufacturers and brands that excel. If the acquisition helps with design and better build, and less mark-ups and more rationalisation, then it should be good.”
Barry Acton, group head of commercial strategy at Airedale Group, the UK’s largest catering equipment project and service firm, called the news “significant and exciting”.
Giving his initial thoughts on the deal, he said: “Middleby and Welbilt are two huge players and the merger will result in a combined business with an impressive suite of market-leading brands. I think it’s fair to say that in the UK context neither company has fulfilled anywhere close to its full potential yet.
“However the merger can only make the realisation of their strategic goals more achievable in the long term. We will be looking to get an idea of how and when the businesses will begin to align in the UK over the coming weeks.”
Mr Acton said that in general Airedale has been consistent in its view that consolidation is needed in the catering equipment industry.
“Mergers and acquisitions will result in an acceleration of innovation, cost synergies and attract high calibre personnel to the foodservice sector. Ultimately, all of that will equal better products and service for end-users. We believe that businesses which entered the pandemic with strong balance sheets and took the correct measures to weather the storm over the past 12 months will be the ones that emerge in a position to capitalise on these M&A opportunities.”
Alice Bowyer, group executive chef at The Liberation Group, is looking forward to seeing how the combined product development resource of the two businesses manifests itself in terms of future solutions for commercial kitchens.
“I would hope this is good news for the customers as it could mean exciting developments in kit that we use a lot in pubs and for new product development. Time will tell.”
Andy Kershaw, head of property at pub chain Marston’s, said it will be interesting to see the synergies that both parties are able to find in the UK market.
He said: “We take Merrychef from Welbilt and we have a longstanding supply partnership with Lincat in the Middleby world. I hope that this merger will enable simplification of our supply chain and enhance the customer service we achieve from both of these brands.
“I imagine it will also benefit our account management, administration and warranty support in the medium term. As an end-user it is an interesting development and I look forward to hearing more about this news from both suppliers in the coming days and weeks.”
Seamus O’Donnell, culinary director of The Alchemist, said the merger underscores why it’s always important for operators to have one eye on the bigger picture when it comes to sourcing commercial kitchen equipment.
“The pandemic has been an extremely tough year for all businesses, and mergers – as seen by Middleby acquiring Welbilt – will be noted with a degree of caution but at the same time will be expected in the industry.
“When mega mergers happen, like in this instance, what normally happens in due course is that efficiency and savings come to the forefront at the possible expense of the weaker brand within the group. At The Alchemist , I have always remained loyal to equipment I know and love as it works for me, but you always need to be ready for change and have a constant eye in the market for suitable replacements should your favoured trusted brand be discontinued or become financially unsuitable.”
“I don’t think many people saw that coming and it’s very unusual that news like that wasn’t leaked into the industry. It is two good companies with different end-users. Over the years I think Garland, Enodis, Welbilt lost their way somewhat with all the name changes; maybe now we will see their products featured more under Middleby.”
Jonathan Skinner, managing director of Marshall Catering Equipment, said he is always receptive to significant supplier mergers as it should create opportunities for partners and customers further down the line.
“I like these huge mergers because when you get two great companies coming together, the chances are they will be able to take the positives from both and make some leaps forward in technology for the industry,” he explained.
“New product ranges, pricing structures and better back-up are all things I would expect – maybe even wider availability on products and spares. I am looking forward to the first rep visit so I can get a better picture of how the new-look company can benefit me as a supplier.”
Under the terms of the merger agreement, Welbilt will become an indirect, wholly-owned subsidiary of Middleby.
Upon completion of the merger, it is estimated that current Middleby shareholders will collectively own 76% of the outstanding shares of Middleby common stock, and current Welbilt shareholders will collectively own 24% of the outstanding shares of Middleby common stock.