The transaction, which was unanimously approved by both companies’ boards of directors, provides for a cash payment of 258 pence per Enodis share. In addition, in advance of the closing of the transaction, Enodis will pay a dividend of 2 pence per Enodis share in lieu of an interim dividend in respect of the financial year ending September 30, 2008. The transaction is 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.
Listed in London and operationally headquartered in Tampa, Florida, Enodis, a global leader in commercial foodservice equipment with a variety of premier brands, reported revenues of £0.8 billion (US $1.6 billion) in the financial year ended September 29, 2007. 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.
Glen E. Tellock, Manitowoc president and CEO says, “We have long recognized the value that a combination of the foodservice businesses of Enodis and Manitowoc would create. We believe the strategic benefits of the combination are substantial, and we are pleased to have reached an agreement for this transforming acquisition.”
“We believe the offer price provides good value to Enodis’ shareholders while also allowing Manitowoc’s shareholders to realize the benefits that the enhanced global business platform is expected to generate through deeper customer relationships, a more robust R&D process, and operating synergies,” Tellock explains.
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 $60 million. Historical revenues for the combined companies for the most recently completed respective financial years exceeded $5.6 billion.
“We believe the expanded global footprint of the combined businesses creates an outstanding growth platform for Manitowoc Foodservice,” says Michael Kachmer, president of Manitowoc Foodservice. “With the world’s largest foodservice companies growing at rates well in excess of the overall industry, we should be well-positioned to partner with our customers in creating modern, efficient kitchens that deliver the dining choices that consumers want,” Kachmer says.
The proposed acquisition continues the company’s history of creating global growth platforms through meaningful bolt-on acquisitions. In 2001 and 2002, the company acquired Potain and Grove to create one of the global crane industry’s most complete product portfolios. In 2002, the company’s Crane segment had pro forma revenues of less than $1 billion. Since that time, Manitowoc has enhanced its service offering to include an industry-leading aftermarket support network, has introduced more than 100 new products, and now operates manufacturing and service facilities in more than 20 countries to serve its global customers and their specific needs. In 2007, the company’s Crane segment had revenues totaling more than $3 billion.
“The acquisition of Enodis provides the opportunity to replicate the tremendous growth strategy that we employed in the lifting industry,” Tellock adds. “The same elements are in place for this strategy to succeed again – industry leading brands, a global footprint to meet the specific needs of a global customer base, a commitment to technology, new product development and world-class aftermarket services, all supported by a team of the industry’s most talented people.”
2008 EARNINGS OUTLOOK Manitowoc believes the acquisition of Enodis is consistent with the company’s strategic and financial imperatives of profitable growth and value creation, driven by innovation, customer and people focus, and excellence in operations and services. 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.
For 2008, Manitowoc re-affirms its previous earnings guidance of $3.20 to $3.40 per share for the standalone business. The company continues to believe there will be incremental margin improvements in the second half of 2008 in the Crane segment and better than industry growth with Foodservice revenues in the mid-single-digits and improving margins in the mid-teens.
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