Welbilt said it had accepted a larger offer from an Italian firm, Ali Group.
Middleby said it was entitled to a $110 million fee from Welbilt that will be paid with the termination of the merger deal.
At last check shares of Middleby were up 3.5% to $18.20, while Welbilt was sliding 6% to $23.42.
Middleby said it expected its merger agreement to terminate Tuesday.
Welbilt said in April that it agreed be acquired by Middleby for $2.9 billion of stock. The deal's enterprise value was $4.3 billion.
Last week, however, Welbilt said that Italian rival Ali Group's revised takeover bid was superior to its agreement with Middleby and that it planned to move ahead with the offer.
Welbilt said it a statement that Ali Group would pay $24 a share cash, up from an earlier $23-a-share cash proposal made on May 25 and implying an enterprise value of about $4.8 billion.
Middleby had offered stock valued at $22.50 a share for Welbilt.
On Tuesday Middleby said it would not exercise its right to propose any modifications to the terms of the merger agreement and would allow the five-day match period to expire.
Middleby Chief Executive Timothy FitzGerald said in a statement that its proposal offered Welbilt holders "the ability to participate in substantial upside opportunity from Middleby’s continued growth, while remaining attractive to our existing Middleby shareholders."
"The additional cash infusion Middleby stands to receive upon termination will put us in an even better position to execute on our existing M&A growth strategy," he said.
Headquartered in Milan, Ali Group has operations in Chicago. The company and its 80 global brands employ about 10,000 people in 30 countries.
In other merger news, last week Bullish, a cryptocurrency exchange company, said it intended to go public through a merger with Far Peak Acquisition (FPAC) a special purpose acquisition company, in a deal valued at about $9 billion.