British restaurant equipment manufacturer Enodis plc. (ENO.L) has agreed to recommend the 328 pence per share takeover offer from Manitowoc Co. Inc. (MTW), following completion of an auction process with Illinois Tool Works Inc. (ITW). Manitowoc's final offer values Enodis at about $2.7 billion, including the assumption of net debt of $249 million.
In the bidding war for Enodis, Manitowoc, which makes cranes and food-service equipment, trumped its American rival Illinois Tool. The acquisition of Enodis would help Manitowoc gain entry into two new major markets - hot food service, and food retail equipment markets. The deal will position Manitowoc as a global leader in commercial foodservice equipment, ahead of Illinois Tool. The revised bid proposed by Illinois Tool in the auction process was not disclosed by the Takeover Panel. Enodis stock has gained 122% since Manitowoc tabled its initial takeover offer in early April.
The bidding war began when Enodis, which in April agreed to be acquired by Manitowoc for $1.9 billion or 260 pence a share, accepted a sweetened 282 pence per share offer price from Illinois Tool in early May. The battle for Enodis heated up with Manitowoc sweetening its offer to 296 pence per share, valuing Enodis at $2.1 billion. Manitowoc's revised bid topped Illinois Tool's offer price of 282 pence a share or $2 billion.
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. Subject to the posting of the scheme document relating to Manitowoc's bid, Illinois Tool Works will withdraw its offer to acquire Enodis.
Manitowoc expects the transaction to generate annual synergies of more than $80 million by 2010. For the 12 months ended March 29, Enodis reported revenues of 0.8 billion pounds Sterling (US $1.7 billion). For the twelve months ended Dec 31, 2007 Manitowoc notched $4 billion in revenue.
The acquisition is expected to be accretive to Manitowoc's per share earnings in 2009 and EVA positive* in 2011. (*Positive EVA means the transaction will add value for shareholders).
For 2008, Manitowoc continues to expect earnings of $3.20 to $3.40 per share for the standalone Manitowoc business. FirstCall has earnings estimates pegged at $3.41 per share.
MTW closed Monday's trade at $32.53 per share. ENO.L is trading at 314.75 pence a share, down 1.18% on a volume of 1.61 million shares.
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