The Middleby Corporation Repurchases Shares from the
Whitman Family.
William
F. Whitman, Jr. to retire as Chairman and Selim A. Bassoul to Assume the
Additional Post of Chairman.
ELGIN, Illinois (December 23, 2004) – The Middleby
Corporation (NASDAQ: MIDD) (the “Company” or “Middleby”) announced today that
it has repurchased 1,808,774 shares of its common stock and 271,000 options
from William F. Whitman, Jr., the Chairman of the Company’s board of directors,
members of his family and trusts controlled by his family (collectively, the
“Whitmans”) in a private transaction for a total aggregate purchase price of
$83,974,578 in cash. The repurchased
shares represented approximately 19.6% of the Company’s 9,251,474 outstanding shares and were repurchased
at a price of $42 per share, which represents a 12.8%
discount to the closing market price of $48.19 of the
Company’s common stock on December 23, 2004 and a 21.7%
discount from the $53.64 average closing price over the
thirty trading days prior to the repurchase.
The options were purchased at a price equal to the difference between
$42 and the exercise price of the option.
The Company
financed the share repurchase with borrowings under a $160 million senior bank
facility that was established in connection with this transaction. The newly established senior bank facility
provides for $70 million in term loan borrowings and $90 million of borrowing
availability under a revolving credit facility. As of December 23, 2004 the Company had $123.3 million of total
outstanding debt, after giving effect to the borrowings
incurred to fund the share repurchase, and expects to fund approximately $8
million of additional costs related to the transaction.
William F.
Whitman, Jr., who will turn 65 in February, has retired from his post as
Chairman of the Board after 26 years.
In addition, Laura B. Whitman, W. Fifield Whitman, and Robert R. Henry
have resigned as Directors of the Company
The transaction was negotiated and approved
by a special committee of the Company’s board of directors consisting of all of
its independent directors. The special
committee retained independent legal and financial advisors to assist in the
evaluation and negotiation of the transaction.
Lehman Brothers Inc., the independent financial advisor to the special
committee, rendered a fairness opinion to the special
committee stating that, from a
financial point of view, the consideration being paid
by the Company to the Whitmans in the
stock repurchase transaction is fair to the
Company.
The Company
expects the repurchase of shares, which reduces the number of outstanding
shares of the Company to approximately 7.4 million, to be accretive to the
Company’s 2005 earnings per share. For
financial reporting purposes, in the fourth quarter of 2004, the Company
expects to record a pretax charge in the range of $13 to $16 million, which
will include $8.0 million associated with the repurchase of stock options from
the Whitmans that will be reflected as compensation expense for financial
reporting purposes, $1.2 million associated with the write-off of deferred
financing costs related to the Company’s previous bank facility that was
refinanced as a result of the transaction, an estimated $3.0 million of expense
associated with a pension settlement for William F. Whitman Jr., an estimated
$2.5 million of the investment banking and legal fees, and various other costs
associated with the transaction. These
charges are anticipated to be deductible for tax purposes.
In
addition, the Company agreed to file a registration statement under the
Securities Act of 1933, as amended, with the Securities and Exchange Commission
to permit the Whitmans to sell their remaining 1,849,218 shares of the
Company’s common stock pursuant to a registered underwritten public offering.
The Company
also announced that it has entered into a new seven-year employment agreement
with Selim A. Bassoul under which he will serve as the new Chairman of the
board of directors and will continue to serve as President and Chief Executive
Officer of the Company. The employment
agreement was approved by all of the independent directors on the Company’s
board, including all of the members of the Company’s Compensation Committee. The key members of the management team will
remain and continue to serve the Company in their existing capacities.
Don Lummus,
Chairman of Middleby’s special committee commented, “The Company was pleased to
repurchase these shares from the Whitman family. This transaction provided us with the opportunity to repurchase
our stock at a significant discount to market value, while allowing the Whitman
family to liquidate a large block of stock in an orderly fashion. Our healthy balance sheet and strong cash flows have enabled us to
fund this transaction entirely with senior bank debt, while providing for
financial flexibility to invest and to continue to grow our business. We believe that the repurchase of our
shares at this price will provide a sound long-term return to our shareholders.”
Mr. Lummus
continued, “The Company will also assist the Whitmans in the sale of their
remaining shares in an underwritten offering, which will increase the number of
shares available to the public.”
The Company
will file a Current Report on Form 8-K reporting the transaction, to which a
copy of the stock repurchase agreement, the amended and restated credit
facility and new employment agreement with Mr. Bassoul will be filed as
exhibits. The description of these
agreements contained in this press release is qualified in its entirety by
reference to the terms of such agreements.
A conference call will be held at 10:30 a.m. Eastern time
on Wednesday, December 29 and can be accessed by dialing (800) 367-5339 and
providing conference code 3103057. A
webcast of the conference call can be accessed through investor services at
www.middleby.com. A replay of the call
will be available approximately two hours after its completion and can be
accessed by calling (800) 642-1687 and providing code 3103057. A transcript of the call will be posted on
the Company’s website.
Statements in this press release
or otherwise attributable to the Company regarding the Company's business which
are not historical fact are forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The Company cautions investors that such statements are estimates of future
performance and are highly dependent upon a variety of important factors that
could cause actual results to differ materially from such statements. Such
factors include variability in financing costs; quarterly variations in
operating results; dependence on key customers; international exposure; foreign
exchange and political risks affecting international sales; changing market
conditions; the impact of competitive products and pricing; the timely
development and market acceptance of the Company's products; the availability
and cost of raw materials; and other risks detailed herein and from
time-to-time in the Company's SEC filings.
This press release shall not
constitute an offer of securities or the solicitation of an offer to purchase
securities. Any offer will be made only
by the prospectus to be included in the registration statement after it has become
effective or pursuant to an exemption from the registration requirements of the
federal securities laws. This press
release is being issued pursuant to and in accordance with Rule 135 under the
U.S. Securities Act of 1933, as amended.
The
Middleby Corporation is a global leader in the foodservice equipment industry.
The company develops, manufactures, markets and services a broad line of
equipment used for cooking and food preparation in commercial and institutional
kitchens and restaurants throughout the world. The company's leading equipment
brands include Blodgett®, Blodgett Combi®, Blodgett Range®, CTX®, MagiKitch'n®,
Middleby Marshall®, Pitco Frialator®, Southbend®, and Toastmaster®. Middleby's
international subsidiary, Middleby Worldwide, is a leading exporter and
distributor of foodservice equipment in the global marketplace. Middleby's
international manufacturing subsidiary, Middleby Philippines Corporation, is a
leading supplier of specialty equipment in the Asian markets.
For further
information about Middleby, visit www.middleby.com.