Competition Market Authority Declines Further Investigation into Ali Group Acquisition

Ali Group’s pending acquisition of Welbilt cleared a key regulatory hurdle on July 11 when the United Kingdom’s Competition and Markets Authority (CMA) agreed that selling Welbilt’s Manitowoc Ice brand would maintain competition in the market.

Ali Group and Welbilt announced a definitive merger agreement in July 2021 after Ali Group outbid rival Middleby with an all-cash offer equaling $4.8 billion. In response, the CMA, an agency that regulates competition in the United Kingdom, launched an investigation into the proposed merger in May 2022. A month later, the CMA found that the merger was expected to result in a “substantial lessening of competition” in the supply of ice machines in the country. Without a remedy, the CMA said it would refer the acquisition for a phase 2 investigation, which would have further reviewed whether the merger would harm competition.

The U.S. Department of Justice raised similar concerns last year, prompting Ali Group and Welbilt to announce plans to divest Welbilt's Manitowoc Ice brand. In March, Pentair, which does not currently operate an ice machines business in the United Kingdom, announced it would acquire Manitowoc for $1.6 billion. After further review, the CMA determined that sale would be enough to quell its competition concerns, and it decided not to further the investigation to Phase 2. In its decision, the agency wrote, “… the UILs (undertakings in lieu) offered by the Parties are clear-cut and appropriate to remedy, mitigate or prevent the competition concerns identified in the SLC (substantial lessening of competition) Decision and that Pentair is a suitable purchaser of the Divestment Business.”

Pentair’s purchase of Manitowoc was conditional on the CMA approving Pentair as a buyer for the brand. With that hurdle now overcome, the acquisitions of both Welbilt by Ali Group and Manitowoc by Pentair are expected to move forward.