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JAB Holding to buy Panera Bread for $7.5B

Acquisition continues investment fund’s restaurant chain stockpile

JAB Holding Co., owner of a growing cache of coffee and breakfast concepts, on Wednesday added another one, agreeing to pay $7.5 billion for the bakery/café chain Panera Bread Co.

The investment fund will pay $315 per share, a 30 percent premium over Panera’s 30-day trading average as of March 31, the last day of trading before reports of a Panera acquisition began circulating. JAB will also assume about $340 million in debt.

 The purchase price also represents a 20-percent premium over Panera’s all-time closing stock price high on that same date.

 “By any measure, Panera has been one of the most successful restaurant companies in history,” company founder and CEO Ron Shaich said in a statement. “What started as one, 400-square-foot foot store in Boston has grown to a system with over 2,000 units, approximately $5 billion in sales and over 100,000 associates. Today’s transaction is a direct reflection of those efforts, and delivers substantial additional value for our shareholders.”

The deal comes as Panera has gained momentum. In the first quarter, the company said on Wednesday, Panera’s company-owned same-store sales increased 5.3 percent as the chain’s various efforts began having an impact — including its “Panera 2.0” initiative that uses kiosks, table service and a smartphone app to speed service. On a two-year basis, same-store sales are up 11.5 percent.

Panera said its first quarter same-store sales bested the Black Box Intelligence index for the first quarter by 690 basis points.

“We have long admired Ron and the incredible success story he has created at Panera,” JAB partner and CEO Olivier Goudet said in a statement. “I have great respect for the strong business that he, together with its 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.”

The deal is not subject to a financing condition and is expected to close during the third quarter of 2017, subject to approval of Panera shareholders.

JAB is paying a purchase price multiple of approximately 19.5 times earnings before interest, taxes, depreciation and amortization, or EBITDA, based on Nation’s Restaurant News calculations. That continues a trend toward investors willing to pay high prices for strong restaurant chains — Restaurant Brands International Inc. earlier this year agreed to pay a multiple of more than 20 for Popeyes Louisiana Kitchen.

And JAB has been paying high prices for restaurant companies. It bought Krispy Kreme Doughnuts Inc. last year for $1.35 billion. Over the years, it has bought Caribou Coffee, Einstein Noah Restaurant Group Inc., Peet’s Coffee & Tea, Stumptown Coffee Roasters and Intelligentsia Coffee. 

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

TAGS: Fast Casual
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