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Middleby in acquisition proposal with AGA

Tuesday, 16 January 2018
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Wednesday, 15 July 2015


Travers Smith LLP advised The Middleby Corporation on some key aspects of its proposed acquisition of AGA Rangemaster Group plc. 

Middleby today announced a conditional cash offer of 185 pence for each AGA share, valuing AGA at £129 million.

Middleby is a global leader in the foodservice equipment industry. Based in Elgin, Illinois, USA, the company has a strong record of integrating businesses successfully, having purchased over 20 companies in the past five years. The acquisition of AGA will significantly expand Middleby’s manufacturing platform and presence in the UK market, positioning the combined company as a world-wide leader in the premium segment for residential kitchen equipment. 

UK-headquartered, AGA Rangemaster Group is a leading consumer brand which manufactures and distributes some of the best known kitchen appliances and interiors furnishings in the world. Its primary production facilities are in the UK and in Michigan, USA.  The Group employs just under 2,500 people worldwide. The merger will provide AGA with an opportunity to act as the main European platform for Middleby and increase its growth rates in international markets. 

Working with lead counsel Skadden, Arps, Slate, Meagher & Flom LLP on this transaction, Travers Smith advised Middleby on pensions (led by partners Paul Stannard and Dan Naylor, who were assisted by associates Tom Green and Joseph Wren), employee incentives (led by partner Mahesh Varia and assisted by associate Kevin Donegan) and real estate (led by associate Anna Knight) aspects of the transaction.

Before making its announcement, Middleby reached an agreement with the trustee of the AGA Rangemaster Group Pension Scheme regarding future funding and investment strategies for the Pension Scheme.  The actuarial valuation of the Pension Scheme as at 31 December 2014 is to be completed on an agreed basis and will show that, on that valuation date, the scheme’s assets were £877 million compared with technical provisions for statutory funding purposes of £961 million, a shortfall of £84 million. This shortfall is to be addressed by a recovery plan requiring deficit contributions of £10 million shortly after the acquisition, a further £10 million in January 2016, and up to £2.5 million per annum during the six years after the third anniversary of the acquisition. The two contributions of £10 million are to be funded by Middleby.

Two guarantees are to be given by Middleby Marshall Inc. in favour of the Pension Scheme. The first is a guarantee of all AGA’s obligations to the Pension Scheme subject to a cap of £60 million. The second is a supplementary guarantee limited to the aggregate outstanding amount of deficit contributions under the Pension Scheme’s schedule of contributions from time to time subject to a variable cap starting at £95 million. The second guarantee is conditional on implementation of the long-term funding and investment strategies agreed between the trustee and Middleby.

Other legal advisers on the transaction included Allen & Overy, who advised AGA, and Clifford Chance, who advised the Pension Scheme trustee.

Morgan Stanley were the financial advisers to Middleby and N M Rothschild were the financial advisers to AGA. 

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