The successful integration of the Manitowoc and Enodis foodservice businesses will create a dynamic platform for global growth. With capabilities that span refrigeration, ice-making, cooking, food-prep, and beverage-dispensing technologies, Manitowoc will be able to equip entire commercial kitchens and serve the world's growing demand for food prepared away from home.
"Given the experience that we gained in prior acquisitions, we will use a consistent approach in integrating Enodis and Manitowoc," says Glen E. Tellock, president and CEO. "Teams consisting of Manitowoc and Enodis leaders are jointly focused on creating profitable growth driven by an emphasis on new product development and process innovations."
"We believe that our expanded product line and broad-based manufacturing capabilities will enable Manitowoc's Foodservice segment to grow and succeed, even in a diverse global marketplace," Tellock adds. "Consistent with our expectations, we believe that the Enodis acquisition will be EPS accretive in 2009, while achieving $80 million of annual synergies and generating positive EVA by 2011."
Due to currency hedges for the Enodis purchase price, Manitowoc's third-quarter results will include the recognition of a loss of $198.4 million before taxes ($0.99 per diluted share). This hedging loss reflects accounting treatment of hedges for the purchase price of Enodis plc that was employed to remove the currency risk inherent in Manitowoc's Great British Pound offer for Enodis. Manitowoc's credit commitment required that 80 percent of the purchase price of Enodis be hedged by July 30, 2008. Given the significant reduction in the Great British Pound to U.S. dollar exchange rate that has since occurred, the accounting treatment for the hedges put in place take the form of a mark-to-market loss. This is a one-time, non-cash loss that effectively capped the U.S. dollar cost of Enodis at a more favorable exchange rate than was anticipated when we announced our bid for Enodis. Additionally, the accounting treatment of this hedge will lower the initial amount of goodwill booked for the acquisition by $198.4 million as of September 30, 2008. The final disposition of this hedge position will be determined based upon the market exchange rate on the date the transaction is funded which is expected to be November 7, 2008.
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