Middleby To Spin-Off Its Food Processing Unit In 2026

Middleby Corporation Announces Strategic Separation of Food Processing Business

Introduction

The Middleby Corporation, a global leader in commercial food service, residential kitchen equipment, and food processing solutions, has recently announced a significant strategic move. On February 25, 2025, the company revealed that its Board of Directors has approved a plan to separate its Food Processing Business into a standalone, publicly traded company. This decision is part of a broader strategic review aimed at maximizing shareholder value and positioning the company for long-term success. The transaction is expected to be completed by early 2026 and will be structured as a tax-free distribution to Middleby shareholders under U.S. federal income tax laws.

Deal Overview and Rationale

The separation of the Food Processing Business into an independent entity is intended to create two distinct, market-leading companies. Middleby RemainCo will consist of the Commercial Food Service and Residential Kitchen Equipment businesses, while the Food Processing segment will operate as a standalone company. This separation is driven by the recognition that both businesses have unique growth strategies and operational needs. By spinning off the Food Processing Business, Middleby aims to enhance operational efficiency, optimize capital allocation, and sharpen the strategic focus of each business. The transaction is contingent upon various conditions, including regulatory approvals and compliance with SEC requirements. Goldman Sachs & Co. LLC and Skadden, Arps, Slate, Meagher & Flom LLP are serving as financial and legal advisors, respectively. Timothy FitzGerald will continue to lead Middleby RemainCo and will also serve on the board of the new Food Processing entity.

Leadership and Governance Enhancements

To support the separation and future growth, Middleby has strengthened its leadership team with key board appointments. Ed Garden, Founding Partner of Garden Investments and former Chief Investment Officer at Trian Partners, has been appointed as an independent director. His appointment is part of a cooperation agreement with Garden Investments, which has agreed to support the full slate of directors at the upcoming Annual Meeting. Additionally, Julie Bowerman, a seasoned executive with over 25 years of experience in the food and beverage industry, has joined the board. Currently serving as Chief Marketing Officer of Kellanova Company, she brings valuable insights from her leadership roles at prominent companies like Coca-Cola and Hain Celestial.

Strategic Benefits and Market Positioning

The separation is expected to unlock significant value for shareholders by creating two focused, industry-leading companies. Middleby RemainCo will concentrate on innovation in IoT-driven kitchen solutions, automation, and beverage innovations, while the Food Processing entity will expand its leadership in protein, bakery, and snack processing. Both companies will benefit from enhanced financial flexibility, allowing them to pursue growth opportunities and strategic acquisitions in their respective markets. The spin-off will also improve market transparency and investor understanding of each business’s performance, enabling more accurate valuations. Furthermore, the separation aligns with broader market trends, such as the increasing adoption of automation and sustainability initiatives in the food service and processing industries.

Operational and Financial Performance

Middleby’s segments have demonstrated resilience and growth potential despite macroeconomic challenges. The Commercial Food Service segment remains the largest contributor to revenue, driven by innovations like the Turbochef Double Batch Oven and the Newton Gravity beverage-dispensing platform. The Residential Kitchen segment is poised for recovery, supported by new product launches and a focus on connected appliance technology. The Food Processing segment has been a standout performer, with strong organic growth and strategic acquisitions like JBT Morrell, positioning it for continued success as a standalone entity. In FY24, Middleby reported a revenue of $3.9 billion, with the Food Processing segment achieving a revenue increase of 1.4% year-over-year.

Future Outlook and Growth Opportunities

Looking ahead, Middleby RemainCo and the Food Processing entity are well-positioned to capitalize on emerging market trends and drive long-term growth. Middleby RemainCo will focus on expanding its market-leading presence in commercial and residential kitchen equipment, leveraging investments in IoT-enabled solutions and automation. The Food Processing entity will concentrate on labor-saving automation, sustainability initiatives, and strategic acquisitions to reinforce its market leadership. Both companies are expected to maintain strong EBITDA margins and deliver substantial upside potential, with Middleby RemainCo projecting a margin expansion to 25% by 2028 and the Food Processing entity targeting margins exceeding 27%. The planned M&A pipeline for the Food Processing entity represents a significant opportunity to rapidly scale revenue and EBITDA, further solidifying its position as a consolidator in the industry.

With a focus on innovation, operational efficiency, and strategic growth, Middleby Corporation’s decision to separate its Food Processing Business is a pivotal step in its commitment to maximizing shareholder value and driving long-term success in the dynamic food service and processing industries.