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Subway-sale-price-lower-~$7B.jpg Ron Ruggless
Subway's reported sale price may be lowered, according to a report this week in the New York Post.

Subway may lower sale price to ‘upwards of $7B,’ report says

Franchised sandwich restaurant chain originally had sought about $10 billion

Subway’s planned sale, originally priced at about $10 billion, may be lowered, according to a report this week in the New York Post.

“Insiders are now pegging a takeout price for the fast-food giant at upwards of $7 billion — well short of the $10 billion it had been seeking when news of the auction was first reported by the Wall Street Journal on Jan. 11,” the New York Post report said.

Sources told the Post that the Subway auction “has drawn lackluster interest from prospective buyers — forcing the sandwich chain to push back bidding deadlines and raising the possibility of a lower sale price.” The asking price had been about $10 billion when the Wall Street Journal first reported the possible sale in January.

“After taking an initial round of bids in late February, sources said Subway has failed to set a deadline for second-round bids, which typically comes a few weeks after indications of interest are submitted,” the Post noted.

Among earlier reported bidders showing interest in the chain were private-equity firms including Bain Capital, Clayton, Dubilier & Rice, Goldman Sachs Asset Management and TPG Capital,

Further reports indicated interest from Atlanta-based Roark Capital Group, owner of Inspire Brands and the parent company to Arby’s, Buffalo Wild Wings, Dunkin’, Jimmy John’s and Sonic. Other interest had been reported from the EG Group.

“Committed offers won’t likely be due until late this month — a delay meant to give suitors more time to conduct due diligence,” said sources close to the process.

“They want to prevent everyone teaming up and driving the price down,” a source close to the situation told the Post. “Subway likely will be sold but price is an issue.”

Subway also has barred potential suitors from speaking to lenders about leveraged financing other than its own adviser, JPMorgan Chase & Co., a policy intended partly to prevent leaks, sources close to the situation told the Post.

Milford, Conn.-based Subway on Feb. 14 confirmed it was exploring a sale.

Subway has about 37,000 locations in more than 100 countries.

Contact Ron Ruggless at [email protected]

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