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Item 1.01.
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Entry into a Material Definitive Agreement
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On July 14, 2021, Welbilt, Inc., a Delaware corporation
(the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ali
Holding S.r.l., an Italian società a responsabilità limitata (“Ali”), Ali Group North America Corporation,
a Delaware corporation and a wholly owned subsidiary of Ali (“Acquiror”), and Ascend Merger Corp. (“Merger
Sub”), a Delaware corporation and a wholly owned subsidiary of Acquiror. Upon the terms and subject to the conditions
set forth in the Merger Agreement, at the closing, Merger Sub will merge with and into the Company, with the Company surviving as an indirect
wholly owned subsidiary of Middleby (the “Merger”). The board of directors of the Company (the “Company Board”)
has unanimously approved the Merger Agreement, and the Company Board recommends that the Company’s stockholders
adopt the Merger Agreement.
The execution by the Company of the Merger Agreement
followed a determination by the Company Board that the proposal from Ali reflected in the Merger Agreement constituted a Company Superior
Proposal, as defined in the previously announced Agreement and Plan of Merger, dated as of April 20, 2021 (the “Middleby Merger
Agreement”) by and among The Middleby Corporation, a Delaware corporation (“Middleby”), Middleby Marshall
Inc., Mosaic Merger Sub, Inc. and the Company, and the subsequent termination by the Company, on July 14, 2021, of the Middleby Merger
Agreement in accordance with its terms.
Subject to the terms and conditions set forth in
the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value
$0.01 per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective
Time (other than shares of Company Common Stock held by the Company as treasury stock or held, directly or indirectly, by Ali or Merger
Sub immediately prior to the Effective Time) will be converted into the right to receive $24.00 per share in cash (the “Merger
Consideration”). Any shares of Company Common Stock held by the Company as treasury stock or held, directly or indirectly, by
Ali or Merger Sub immediately prior to the Effective Time will automatically be cancelled and retired and excluded from the right to receive
the Merger Consideration.
Subject to the terms and conditions set forth in
the Merger Agreement, at the Effective Time, (i) each outstanding option to purchase Company Common Stock, whether vested or unvested,
will be converted into the right to receive an amount in cash equal to the per share Merger Consideration less the exercise price per
share of Company Common Stock of such option, (ii) each outstanding restricted stock award and restricted stock unit award with respect
to Company Common Stock will automatically be vested and converted into the right to receive an amount in cash equal to the per share
Merger Consideration, and (iii) each outstanding performance stock unit award with respect to Company Common Stock will automatically
be converted into the right to receive an amount in cash equal to the product of the per share Merger Consideration and the number of
shares of Company Common Stock earned pursuant to such performance stock unit award, assuming the maximum level of performance is achieved
((i), (ii), and (iii) collectively, the “Converted Awards”).
The Company has agreed not to directly or indirectly
solicit alternative proposals and to terminate all existing discussions, negotiations and communications with any persons with respect
to any alternative proposal. However, the Company Board may, subject to certain conditions, respond to unsolicited proposals from third
parties and withdraw its recommendation in favor of adoption of the Merger Agreement or terminate the Merger Agreement, in each case,
if, in connection with the receipt of an alternative proposal, the Company Board determines in good faith that (x) such alternative
proposal constitutes a superior proposal and (y) a failure to effect such a withdrawal of recommendation would be reasonably likely to
be inconsistent with its fiduciary duties. In addition, the Company Board may withdraw its recommendation (but not terminate the Merger
Agreement) if, in connection with a material event or circumstance occurring after the date of the Merger Agreement that was not known
or foreseeable as of the date of the Merger Agreement, it determines in good faith that a failure to effect such a withdrawal of recommendation
would be reasonably likely to be inconsistent with its fiduciary duties.
The completion of the Merger is subject to the
satisfaction or waiver of customary closing conditions, including (i) approval and adoption of the Merger Agreement by the Company’s
stockholders, (ii) expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and receipt of applicable approvals under certain foreign competition, antitrust or merger control laws, (iii) there being no
law or order prohibiting consummation of the Merger, (iv) subject to specified materiality standards, the accuracy of the representations
and warranties of the parties, (v) compliance by the parties in all material respects with their respective covenants, (vi) the
absence of a material adverse effect with respect to each of Ali and the Company, and (vii) the delivery of an officer’s closing
certificate by both parties. The completion of the Merger is not conditioned on receipt of financing by Ali.
Ali and the Company have made customary representations
and warranties in the Merger Agreement. The Merger Agreement also contains customary covenants and agreements, including covenants and
agreements relating to (a) the conduct of the Company’s business between the date of the signing of the Merger Agreement and the
consummation of the Merger, (b) the efforts of the parties to cause the Merger to be completed, (c) obligations to convene and hold the
Company’s stockholder meeting to obtain approval and adoption of the Merger Agreement and (d) obligations to cooperate with each
other to prepare and file a proxy statement with respect to the Merger with the SEC.
The Merger Agreement provides that the Company
may be required to pay Ali a termination fee equal to $110 million if the Merger Agreement is terminated (i) by Ali following an adverse
recommendation change of the Company Board, the failure by the Company to include its board recommendation in the proxy statement
or any other material violation by the Company of the non-solicitation covenant, (ii) by the Company to enter into an agreement in respect
of a superior proposal, and (iii) (a) by Ali due to a breach of a covenant or agreement by the Company that causes the failure of a condition
to closing, (b) by either party if the Merger has not been consummated prior to July 14, 2022 (subject to extension if certain approvals
have not been obtained by such date) or (c) by either party due to failure to obtain the approval of the Company stockholders, if, in
the case of clauses (a), (b) or (c), an alternative proposal has been publicly disclosed, announced or otherwise made public and has not
been withdrawn and within twelve months of such termination the Company enters into a definitive agreement with respect to, or consummates,
an alternative proposal. The Merger Agreement further provides that if the Merger Agreement is terminated in certain circumstances, the
Company will reimburse Ali for its payment, on the Company’s behalf, of the $110 million termination fee to Middleby in connection
with terminating the Middleby Merger Agreement.
If the Merger Agreement is terminated by either
Ali or the Company due to the Company’s failure to receive the requisite approval of its stockholders, then the Company will be
required to reimburse Ali for up to $20 million of expenses incurred in connection with the transaction (including any expenses incurred
by Ali related to its financing). In circumstances in which a termination fee later becomes payable by the Company, any expense reimbursement
previously paid by the Company will be credited against such termination fee.
In connection with the execution of the Merger
Agreement, on July 14, 2021, Ali and certain stockholders of the Company affiliated with Carl C. Icahn (collectively, the “Company
Significant Stockholders”) entered into a voting and support agreement (the “Icahn Voting Agreement”), pursuant
to which the Company Significant Stockholders have agreed, among other things, to vote all of their shares of Company Common Stock (which
represents approximately 7.7% of the outstanding shares of Company Common Stock) in favor of the Merger and adoption of the Merger Agreement.
The Icahn Voting Agreement will terminate upon the earliest of (a) the Effective Time, (b) the termination of the Merger Agreement in
accordance with its terms, (c) the entry into or effectiveness of certain amendments, modifications or waivers of the Merger Agreement,
(d) an adverse recommendation change by the Company board of directors, or (e) written notice of termination by Ali to the Company Significant
Stockholders.
The foregoing description
of the Merger Agreement and the transactions contemplated by the Merger Agreement does not purport to be a complete description thereof
and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and incorporated
herein by reference. The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended
to provide any other factual information about the Company, Ali or their respective subsidiaries and affiliates. The Merger Agreement
contains representations and warranties by each of the parties to the Merger Agreement, which were made only for purposes of that agreement
and as of specified dates. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the
parties to the Merger Agreement, are subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these
matters as facts, and are subject to standards of materiality applicable to the contracting parties that may differ from those applicable
to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations
of the actual state of facts or condition of the Company, Ali or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in the Company’s public disclosures.