Premium diversified machinery manufacturer Middleby Corporation (MIDD) recently acquired the manufacturing facility and certain assets of the high-speed slicing business segment of Marel. The transaction for an undisclosed amount is expected to be settled by the end of first-quarter 2015.
However, the news failed to cheer investor sentiment as the share price was up by a mere 1% post the deal announcement. We expect the acquisition to reinforce Middleby’s brand and financial status in the near future.
The Norwich, U.K.-based Marel is a leading provider of innovative business solutions. The company helps its corporate client’s combat environmental challenges by providing competent solutions, and also assists in modernizing consumer habits.
As per the deal, Middleby would rebrand and sell the products of Marels’ slicing business unit under its original brand name, Thurne. The company’s Thurne slicing technology includes specialized cheese, bacon and deli-meat automatic slicing equipments. By strategically leveraging Marel’s new variety of high-speed slicing products, Middleby is expected to reduce customers’ cooking cost and labor.
Middleby aspires to become the undisputed leader in the global foodservice equipment industry. As a step toward this goal and in sync with its inorganic growth strategy, the acquisition would help the company strengthen its product portfolio, technological expertise and brand position. Furthermore, the acquired business generates approximate annual revenues worth $15 million, which is expected to augment Middleby’s top-line value in the upcoming quarters.
In the last reported quarter, Middleby’s adjusted earnings surpassed the year-ago tally by 43.8% and the Zacks Consensus Estimate by 22.1%. With year-over-year revenue growth of 12.3%, the company has maintained a strong outlook for the upcoming earnings session. Such lucrative deals are expected to lend further support to the company’s solid guidance.
With a market capitalization of $6.19 billion, Middleby currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Kadant Inc. (KAI), Advanced Emissions Solutions, Inc. (ADES) and AO Smith Corp. (AOS). All three stocks hold a Zacks Rank #2 (Buy).
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