Acquiring Taylor Company for $1 Billion
- Middleby is acquiring Taylor Company (part of United Technologies) for $1.0 billion (Middleby’s largest ever acquisition), or 3.2x sales and 13.1x EBITDA (or 10.6x including $15 million of expected cost synergies over the next two years);
- Taylor, a leader in beverage solutions (including frozen yogurt, shake and ice cream dispensing equipment, frozen drink machines, and smoothies) expands Middleby’s reach in beverage, provides a pipeline of new products, and allows Middleby to better engage with restaurant chains, including the ability to make customized deserts specific to each restaurant chain;
- We feel Taylor fits well with Middleby’s proven strategy of constantly broadening its product line, although margins are lower than the corporate average;
- We are maintaining our projections until the acquisition closes (expected in 3Q18), but our early estimate is that Taylor could add 2 cents to EPS in 2018 and 10 cents in 2019.
Middleby is engaged in the design, manufacture, marketing, distribution, and service of a line of foodservice equipment, food preparation, cooking, baking, chilling and packaging equipment, and kitchen equipment. The company's segments are: the Commercial Foodservice Equipment Group, which provides foodservice equipment to serve cooking, warming, refrigeration, freezing and beverage application within a commercial kitchen or foodservice operation; the Food Processing Equipment Group, which provides processing solutions for customers producing pre-cooked meat products; and the Residential Kitchen Equipment Group, which manufactures, sells and distributes kitchen equipment for the residential market.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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