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Ali Group Boosts Its All-Cash Offer For Welbilt; Welbilt Board Calls Offer “Superior” To Middleby’s Stock Offer
The merger and acquisition dance between Middleby, Welbilt and Ali Group took another turn last week, after I sent our “Special Issue” update Tuesday, July 5. You’ll recall Ali increased its all-cash offer for Welbilt by a dollar to $24 a share July 5 and made clear in the proposal to Welbilt that it is “binding.” Ali’s new offer came after Middleby and Welbilt had scheduled July 21 shareholder votes on Middleby’s all-stock offer the previous week.
On July 6, Welbilt’s board of directors, after confirming receipt of Ali’s new offer, said the offer constitutes “a ‘Company Superior Proposal,’ as defined in Welbilt’s previously announced merger agreement with The Middleby Corp.” The new Ali offer values Welbilt at $4.8 billion. Welbilt noted again the proposal is binding “and may be accepted prior to July 14.” The Welbilt statement added, “Closing of the transaction would be subject to approval by the stockholders of Welbilt prior to July 14, receipt of other regulatory approvals and other customary closing conditions.” Welbilt: Board Determines Ali Offer Superior 07-06-21
In case you want to refresh your memory, or have been on vacation, here are links to other statements regarding Ali’s new offer, including Middleby’s statement reiterating the value of its original offer original offer, also issued July 6. Middleby: Middleby & Welbilt Moving Merger Forward; BusinessWire: Ali Boosts All-Cash Offer For Welbilt; Welbilt: Confirm Receipt Of Ali Offer; Middleby: Reiterates Value Of Welbilt Offer
This is clearly an evolving situation. As a senior executive at one of the companies told me privately last week, “It’s going to be a very interesting couple weeks for Welbilt shareholders.” Given my close ties to all three of these companies and its executives, I have been reticent about commenting much on what I think, as I written before. Call me a coward if you will.
Andrew Seymour at the UK’s Foodservice Equipment Journal was braver last week. He had a cogent and very entertaining take on the Middleby-Welbilt-Ali dance, comparing Welbilt’s situation to that of Harry Kane, the soccer star who lead the UK team as it attempted to win the UEFA Euro 2020 Cup for the first time in decades this past weekend. He’s also will be a free agent in the UK professional league, if you don’t follow European soccer. Check it out: FEJ: Why Welbilt Is The Harry Kane Of E&S World. England lost the final to Italy 3-2 on sudden death kicks yesterday, in a heartbreaking loss for English fans, if you missed it.
E&S Companies/Manufacturers; Deals & M&A
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NRA’s RPI Forward-Looking Capital-Spending Indicator Remained Historically Very High In May
The National Restaurant Assn.’s Restaurant Performance Index fell 0.8 point in May, according NRA’s monthly tracking survey, coming off an historical high of 106.3 in April. But these comparisons are somewhat artificial, since RPI indicators are compared to month year prior. And April and May 2020 were the very depth of the Covid pandemic-induced closures.
On the other hand, the RPI is designed to be forward-looking as well a snapshot of restaurant operators’ current situation. The four-component Expectations Index, geared to what those responding think will happen during the next six months, also remains a very historically high level of 105.3, though it too fell moderately by 0.6 point.
As for the two capital spending measures—one tracking purchase trends the past three months and the other for planned purchases during the next six months—the latter fell 0.9 point from its historical high in April to 103.9. But that remains the second-highest index number for the component since the NRA launched the RPI in 2002.
The cap-ex measure tracking purchases the past three months rose 0.3 point to 102.5. This measure remains well below its historical high 0f 105.2 reached October 2015, after gasoline prices plunged that year, goosing restaurant sales and operator cash flow. The marker had been in contraction territory in January and February this year, during the third pandemic surge. NRA: RPI 05-21
What the RPI’s capital spending indicators seem to be telling us is that current spending through May was improving, but that restaurant operators have unfulfilled equipment and supplies needs they anticipate they will have to fill over the summer and into the fall. And this bodes well for the recovery of the E&S market.
Market Trends/Operator Trends, E&S Market Trends
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Restaurants Added Another 194,300 Jobs In June, But Sector Remains 10% Short Of Pre-Covid Levels
The US economy generated 850,000 new jobs in June, according to the latest Employment Situation Report from the Bureau of Labor Statistics. The recovery of hiring in the leisure and hospitality sectors continued to fuel the overall gain, with a total number of 343,000 added jobs, contributing 40.4% of the total. Other sectors showing strong net new-job gains included the public education sector within government. Local government education added 155,200 jobs while education at the state level, mostly college and university employees, grew employment by 74,500.
Food services (sic) and drinking places accounted for 194,300 of the leisure and hospitality job total, bringing the total number restaurant and bar jobs created January through June to more than one million. But that still leaves the sector down 1.3 million jobs, according to the National Restaurant Assn.’s monthly report on the jobs numbers, or 10% off pre-Covid numbers. In other segments important to foodservice, hotels added 75,100 jobs and amusements, casinos and other recreation such as sports stadia saw 44,800 new net jobs.
The NRA’s analysis also notes that the BLS data reports there were 1.2 million job openings in the restaurant and accommodation sector at the end of May. Restaurants, hotels and most other foodservice segments simply have more need for workers than there are workers to currently fill those jobs. But it’s not just leisure and hospitality struggling to find help. Professional and business services have 1.5 million openings, healthcare and social assistance another 1.5 million, retail has 974,000 openings and manufacturing 814,000. BLS: Jobs 06-21; NRA: RPI 05-21
The NRA wrote in its monthly analysis that “Restaurants certainly have plenty of competition right now.” The BLS monthly jobs report just confirms what every operator knows: It’s very difficult to find enough staff to meet the suddenly soaring demand, even with average restaurant wage rates that are 8% higher than January. The demand spike is, of course, driven by consumers going back to pre-pandemic behaviors, including dining in restaurants.
Market Trends/Economic Trends, Consumer Trends, Operator Trends
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E&S Executive News
There have been some very significant executive appointments at E&S companies recently, and well-known industry veteran Debbie Hanson, vp-sales at ITW/FEG’s Vulcan and a NAFEM board member, will retire at the end of August, it was announced. We’ll give each their due.
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Lorne Deacon Named Executive VP At Hatco, Reilly Promoted To Director At Ovention Ovens
Hatco Corp., the Milwaukee, Wis.-based manufacturer of foodservice equipment, has promoted to Lorne Deacon to executive vp. Deacon, who joined the company in 2018, will continue to oversee Hatco’s Ovention brand and all Hatco marketing activities, but he adds oversight responsibility for all Hatco and Ovention manufacturing operations.
“Lorne is a genuine team player with great knowledge and relationships throughout the industry,” said Hatco Pres. Dave Rolston. “We expect that he’ll bring the same strength of character and leadership to his new role and continue Hatco’s success.
Deacon began his career in banking and finance, came to the foodservice equipment industry in 2013, and previous to joining Hatco, was vp of sales at Middleby’s Star brands. (From a company release).
Hatco has also promoted Casey Reilly to director-Ovention Ovens. Ovention is Hatco’s brand of ventless, automated countertop cooking technology. Reilly will have responsibility for all aspects of the Ovention business, reporting to Deacon. He joined the brand in 2016 as embedded systems engineer and has been leading the Ovention engineering team for almost three years.
“In addition to his leadership skills, Casey has a deep knowledge of circuit design, microprocessors and software development, which has contributed to the ongoing success of Ovention Ovens,” said Deacon. (From a company release.) Hatco
The promotion of Deacon to exec. vp signals the beginning of Hatco’s planned succession strategy, as Rolston and Senior VP of Sales & Marketing Mike Whiteley begin to wind down their leadership. Deacon has a broad skill set in finance and marketing, including global marketing—which is important to Hatco—and product development, and proved his capabilities with his leadership at Ovention.
E&S Companies/Manufacturers; People
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Debbie Hanson, VP-Sales At ITW/FEG’s Vulcan Since 2013, Will Retire At the End Of August
Well-known industry veteran Debbie Hanson, vp-sales at ITW Food Equipment Group’s Vulcan, will retire at of the end of August, according to a communication from Markus Glueck, ITW/FEG group president, cooking, and Chris Stern, vp/GM at Vulcan. Hanson has served in the role since 2013. She previously served as president at Star Manufacturing, after sales roles at several other companies. She began her career as a manufacturers’ rep.
“Debbie has earned a reputation for building relationships and thoughtfully developing win-win solutions for our customers and the Vulcan business. Debbie’s sense of humor and ability to lighten the mood in the room will certainly be missed,” Glueck and Stern wrote. (From Vulcan’s Front Burner newsletter and other sources.) Vulcan
Hanson also currently sits on the NAFEM board of directors, where she is in the second year of her second three-year term. She serves on the Member Screening and the Social Purpose Committees.
Hanson is one of the most connected, and well-liked, E&S manufacturer executives in this business. She also has been one of the most successful during a career spanning decades. She knows many, many people at every level of the business, from operators, reps, and dealers to service people. Scores of people in the business consider her a close friend, including me. I assume she’ll be at The NAFEM Show in late August where we can all wish her well.
E&S Companies/Manufacturers; People
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Best Restaurant Equipment & Design Promotes Three
Best Restaurant Equipment & Design, the Columbus, Ohio-based dealer, has given three of its senior executives new titles. The chain-oriented dealership has been an employee-owned company since 2016.
Cecily Adams is now director of operations. She has been serving as operations manager. Kurt Maschari, who has been vendor operations manager is now vp of sales and vendor relations. And Josh Monahan becomes vp of sales & marketing He has been serving as sales manager. FES: Best Restaurant Equipment & Design Promotes Three; Best Restaurant Equipment
All three have been at Best for years. It’s what happens when one is an owner as well as an employee.
E&S/Companies/Dealers; People
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Migali Names Tim Caugh VP Of National Foodservice Sales
Migali Industries, the Blackwood, N.J.-based manufacturer of foodservice refrigeration and cooking equipment as well as refrigeration for the lab and scientific markets, has named Timothy Caugh its vp of national foodservice sales.
Caugh began his foodservice career at 3Wire, the parts distribution company then owned by Cornelius, in 2003, and served in a number of roles including director of marketing, director of product management and marketing and in his last year at the company in 2013-14, as GM of its e-Commerce Distribution units. (Parts Town bought 3Wire’s foodservice business from Marmon in 2018; Marmon had acquired Cornelius in 2014.)
Caugh then moved to Hoshizaki, where he served as director of operations, customer service and director, planning and control through last year. FEDA: Migali Names Caugh VP-Sales-Foodservice; Migali
E&S Companies/Manufacturers; People
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Former Lang Mfg. President John “Jack” Sparacio Passes
Jack Sparacio, who ran Lang Manufacturing as president from 1995 to 2001, passed away June 21. Lang, then based in Everett, Wash., is now a Middleby brand.
Sparacio spent most of his career in the medical device field, having started his career in the Chicago area at such companies as American Hospital Supply and McGaw Laboratories. He went on to own Plastic Engineering and Development, and also served as CEO at several other companies in the medical device field including Advanced Technologies Laboratories Ultrasound, IMED Corp., and SonoSite, also a maker of ultrasound equipment.
Sparacio, who was 78, is survived by his wife Cynthia, three children, two stepchildren, a brother and sister. A memorial service will be held July 23 in Carlsbad, Calif., where he was living in retirement. Greenvelope: Jack Sparacio Memorial Info; LinkedIn: Jack Sparacio; FES: Remembering Jack Sparacio
We were alerted to Sparacio’s passing by George E. Baggott, who summed up Jack’s personality succinctly: “He was a guy that came across like a South(-side) Chicago mobster, but was very much a nice guy.” I know it’s a cliché, but he was indeed a larger-than-life character. I remember standing on the balcony of Jack and Cyndi’s high-rise condo overlooking Puget Sound in Seattle in the late 1990s. Lang’s headquarters and manufacturing facility was then in Everett, just around the corner from Boeing’s gigantic aircraft manufacturing plants. We had a lot of fun together. Our deepest sympathies to Cyndi and the family.
E&S Companies/Manufacturers; People
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Will Rising Gasoline Prices Constrain Foodservice Sales?
Driven by soaring demand and higher crude oil prices, US gasoline prices continued to rise last week. The Energy Information Administration’s preliminary gasoline demand report, released July 8, reported demand over the July Fourth week and weekend reached 10.4 million barrels/day, the highest weekly level since 1991. Crude oil prices also jumped to their highest level in years, in part because of an impasse at OPEC+ over production targets. That impasse continued into this weekend. But crude prices has softened slightly the past few days. And the federal Energy Information Administration forecast crude prices should decrease as the uncertainty created by pandemic disruptions eases.
The national average for a gallon of regular gasoline crept up to near $3.15 over the weekend. Prices are nearly 95 cents higher than a year ago, though prices then were abnormally low because of the decrease in demand for both gasoline and crude. AAA: Gas Prices; AAA: Crude Prices Drive Gasoline Prices Higher; AAA: Record High Demand Helps Push Gasoline Prices Higher; Reuters: OPEC Impasse Continues; Crude Prices Soften; EIA: Weekly Petroleum Report 07-08-21
The question is will these significantly higher gasoline prices begin to constrain foodservice sales. Gasoline price trends have traditionally been one of the key factors in foodservice sales trends, as higher prices eat into consumers’ disposable income, particularly among lower-income households. Millions of these households are also seeing bonus federal unemployment benefits ending. We’ll just have to wait and see.
Economic Trends/Commodity Price Trends
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Curated and written by Robin Ashton, Principal at Ashton Foodservice Consulting. For information, e-mail Robin Ashton at rashton@theashtonreport.com.
The Ashton Report is published weekly and is a unit of RGA 2015 Holdings LLC.
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