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MIDD Acquires Viking Range

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Elgin, Ill.-based, The Middleby Corporation (MIDD) announced to have acquired Viking Range Corporation, a leading brand in residential cooking and kitchen equipment, in an all cash transaction amounting to $380 million.

Viking Range is based in Greenwood, Miss. and has annual sales of approximately $200 million. Over the last 12 months, it has grown 21% to $990 million. Addition of these assets will strengthen Middleby’s portfolio and will enable the company to leverage benefits from improving residential markets, penetrate in emerging markets and grow through new product introductions.

Moreover, the acquisition is expected to be dilutive to Middleby’s earnings per share in the first half of 2013 while being accretive in the second half of 2013. Also, over a 3 year period, EBITDA margin is expected to increase to more than 20%.  

The Middleby Corporation is one of the leading commercial cooking equipment makers and its popular brands include TurboChef, Jade and MagiKitch'n, which will be integrated with Viking Range. Acquisitions have been the company’s important mode of expansion. Prior to Viking Range, the company in 2012 had acquired Nieco Corporation and Steward Systems; its combined annual revenue amounts to $50 million.   

The current Zacks Consensus Estimate for the fourth quarter 2012 is $1.79 while that for 2012 and 2013 are $6.26 and $7.20, respectively, reflecting year-over-year growth of 21.6% for 2012 and 15.0% for 2013.

We currently have a Neutral recommendation on The Middleby Corporation while the stock also bears a Zacks #2 Rank, implying a short-term Buy rating. The company competes with other major players in the industry, Altra Holdings Inc. (AIMC) with a Zacks #1 Rank (Strong Buy) and Illinois Tool Works Inc. (ITW) with a Zacks # 3 Rank (Hold), among others.

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