The Manitowoc Company last week announced it has been notified by the UK Takeover Panel that Enodis plc intends to recommend Manitowoc’s offer following completion of an auction process with Illinois Tool Works Inc. Manitowoc’s successful bid was 328 pence per Enodis share, resulting in a transaction valued at approximately $2.7 billion, including the assumption of Enodis’ net debt (approximately $249 million as of March 29).
The transaction will be structured as a court-sanctioned scheme of arrangement under the laws of the U.K. and is expected to close in the fourth quarter of 2008. The transaction is subject to court approval in the U.K., the approval of Enodis shareholders, as well as regulatory approvals in various jurisdictions. The Takeover Panel has advised Manitowoc that Illinois Tool Works will withdraw its offer to acquire Enodis subject only to the posting of the scheme document relating to Manitowoc’s bid. The amount of ITW’s increased bid in the auction process was not disclosed by the Takeover Panel.
Listed in London and operationally headquartered in Tampa, Fla., Enodis, a global leader in commercial foodservice equipment, reported revenues of £0.8 billion (US $1.7 billion) for the 12 months ended March 29. Enodis is one of the world’s leading suppliers of foodservice equipment, with products on the cold and hot sides of the industry. To date, Manitowoc Foodservice’s focus has been on cold equipment. A combination with Enodis will allow Manitowoc to enter two major new market segments, hot foodservice and food retail equipment, as well as expand its cold-side businesses.
“Throughout this process, we reaffirmed our belief in the transforming opportunities that Enodis provides,” said Glen Tellock, Manitowoc president and CEO. “Even at the higher price, we believe the strategic benefits of the combination are significant while remaining consistent with the strict financial disciplines that we have adhered to for all of our acquisitions. The enhanced global business platform resulting from the combination is expected to generate many benefits through deeper customer relationships, a more robust R&D process and operating synergies.”
Manitowoc believes that the successful integration of the two businesses will result in improved growth prospects and the opportunity to deliver significant synergies. Management currently estimates that, by 2010, the transaction will generate annual synergies of more than $80 million. Historical revenues for the combined companies for the most recently completed respective financial years exceeded $5.6 billion.
Assuming a transaction close in the fourth quarter of 2008, the acquisition is expected to be EPS accretive in 2009 and EVA positive in 2011. Although commodity cost headwinds in 2008 have been extreme, Manitowoc re-affirms its previous earnings guidance of $3.20 to $3.40 per share for the standalone Manitowoc business.
Headquartered in Manitowoc, Wis., The Manitowoc Co. is one of the world’s largest providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers one of the broadest lines of cold-side equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the U.S. maritime industry.