£6 billion restaurant chain mega-merger is biggest deal of year

Panera Bread Company

One of the largest acquisition deals that the global foodservice sector is likely to see this year was announced yesterday after the owner of Krispy Kreme Doughnuts and Caribou Coffee paid $7.5 billion (£6 billion) for the Panera Bread Company.

Private investment firm JAB, which has controlling stakes in a raft of coffee and cafe businesses, including Scandinavia’s largest branded coffee shop chain Espresso House, is paying a premium of 30% on the average stock price from the last four weeks.

The deal includes the assumption of approximately $340m (£272m) of net debt.

Panera Bread is one of the largest chains in the world, with 2,036 bakery-cafes in 46 US states and Canada. It trades under the Panera Bread, Saint Louis Bread Co., and Paradise Bakery & Cafe brands.

Founder and CEO, Ron Shaich, has overseen huge growth at the chain, with the company ranking as the best performing restaurant stock of the past 20 years.

“By any measure, Panera has been one of the most successful restaurant companies in history. What started as one 400 square foot cookie store in Boston has grown to a system with over 2,000 units, approximately $5 billion (£4 billion) in sales, and over 100,000 associates. In more than 25 years as a publicly traded company, Panera has created significant shareholder value.”

Shaich said that over the last five years, Panera has developed and executed a powerful strategic plan to be a better competitive alternative with emerging runways for growth. “The themes we have bet on – digital, wellness, loyalty, omni-channel, new formats for growth – are shaping the restaurant industry today,” he said.

When Panera was set up 30 years ago, it aspired to challenge the perception that ‘quick service’ didn’t have to mean ‘low quality’. Investments in technology and operations have seen it pioneer services such as mobile ordering and rapid pick-up over recent years.

Following the close of the transaction, Panera will be privately held and continue to be operated independently by the company’s management team.

Olivier Goudet, partner and CEO at JAB, said, “We have long admired Ron and the incredible success story he has created at Panera. I have great respect for the strong business that he, together with his management team, its franchisees and its associates, has built. We strongly support Panera’s vision for the future, strategic initiatives, culture of innovation, and balanced company versus franchise store mix. We are excited to invest in and work together with the Company’s management team and franchisees to continue to lead the industry.”

JAB is acquiring Panera through JAB BV, an investment vehicle of JAB Consumer Fund and JAB Holding Company.

IMAGE CREDIT: www.panerabread.com

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