Manitowoc reaches tentative deal for Enodis

By Mike Deibert

MANITOWOC, WI/LONDON, UK-U.S.-based The Manitowoc Company Inc. has won a bidding contest for U.K.-based food equipment conglomerate Enodis plc.

The board of publicly-traded Enodis told Manitowoc in late June that it would recommend shareholders accept a bid totaling $2.7 billion from Manitowoc, which included assumption of $240 million debt. All figures are in U.S. dollars.

In Canada, Enodis is represented by one of its food equipment companies, Garland Canada.

The deal announced on June 30 was actually the second approved this year by Enodis directors.

In April the boards of both companies announced they approved the sale of British-based Enodis to the American company, for $2.1 billion plus assumption of about $207 million in debt.

However, Enodis backed away from the agreement when another U.S. company, Illinois Toolworks, jumped in with an offer about 13 per cent higher than Manitowoc's.

The two companies ended up in an auction supervised by the U.K. Takeover Panel, a process the British regulator set up as an orderly way to resolve the competition between the two American companies.

Manitowoc put in the winning bid, which the Enodis board said it would recommend.
Expected to close in the fourth quarter of 2008, the deal is subject to the approval of a British court, Enodis shareholders and regulatory authorities.

The price per share that Manitowoc will pay is nearly twice what the shares were trading for before Manitowoc made its bid in April.

A 2006 attempt by Manitowoc to buy Enodis failed because of fears of antitrust authorities that a combined company would have too large a share of certain areas of the kitchen equipment market.

Manitowoc has 40 per cent of the U.S. ice machine market, and would hike that percentage to 70 per cent by acquiring Enodis, according to Robert F. McCarthy, an analyst with Robert W. Baird & Co. in Chicago, said a Bloomberg report.

Besides a wide range of cooking equipment, Enodis has two ice making companies, Scotsman and Ice O-Matic.

Britain's Telegraph newspaper reported on its website in April that people close to Manitowoc said the ice maker "had cleared a major obstacle to securing a recommendation by agreeing to a deal that would see it shoulder the burden of any competition issues."

The Telegraph said, "Manitowoc is now thought to have agreed to make any necessary disposals in order to complete the takeover."

Customers for Enodis equipment include McDonald's, Burger King and Starbucks.

Manitowoc has 40 per cent of the U.S. ice machine market, and would hike that percentage to 70 per cent by acquiring Enodis, according to McCarthy, in the Bloomberg report.

Manitowoc now gets about 80 per cent of its revenue from its construction crane division.

Boomberg News reported that New York-based Deutsche Bank analyst Nigel Coe said the takeover of Enodis would increase the percentage of Manitowoc's total revenues from foodservice to 30 per cent from 11 per cent.

Enodis has annual revenues of $1.7 billion worldwide, and the acquisition of the British-based firm would more than quadruple Manitowoc's sales of foodservice equipment, to more than $2 billion.

In 2006 U.S.-based Middleby Corp. and U.K.-based Aga Foodservice Group Plc were also unsuccessful in bids to take over Enodis.