JAB goes after lunch crowd with US$7.2B Panera deal
• JAB Holding Co., the sprawling investment firm that owns Krispy Kreme and Keurig Green Mountain, agreed to buy Panera Bread Co. for about US$ 7.2 billion, adding a bakery- café chain to a food empire that spans coffee, bagels and doughnuts.
The deal vaults JAB into the fast- casual restaurant market — a category that touts fresher ingredients and includes the likes of Chipotle Mexican Grill Inc. and Shake Shack Inc. It also gives the firm access to lunch and dinner crowds, which its current roster of brands doesn’t reach as well.
For North Americans, the transaction means one more household name will be under the banner of the little-known European holding company. JAB, an investment vehicle of Austria’s billionaire Reimann family, has already scooped up Caribou Coffee, the Einstein Noah Restaurant Group, Peet’s Coffee & Tea and Stumptown Coffee Roasters in a frenzied buying spree.
“No one’s ever gone about such an aggressive, f arreaching acquisition trail, with such a focus on the United States,” said Jeffrey Young, managing director of coffee consulting firm Allegra Strategies.
“They’ve very quickly become one of the three most influential companies in coffee,” he said, with JAB standing alongside Starbucks Corp. and Nestlé SA. “One wonders what is next for them.”
The Panera purchase follows the game plan of JAB’s previous deals, where it grants control to a local management team. Panera chief executive Ron Shaich, who founded the bakery chain and has become a wellknown advocate for using natural ingredients, will continue to run the business after the acquisition.
“We are pleased to join with JAB, a private investor with an equally long- term perspective, as well as a deep commitment to our strategic plan,” Shaich said in a statement.
Panera i nvestors will receive US$ 315 per share in cash, according to Wednesday’s statement. That’s 20- per- cent higher than the closing price on March 31, the last trading day before Bloomberg reported Panera was considering a sale.
JAB will take on US$ 340 million in Panera debt, bringing the total deal to about US$ 7.5 billion. It values Panera at 19 times earnings before interest, taxes, depreciation and amortization. That puts the transaction in the same range as JAB’s Krispy Kreme takeover, but it’s expensive by restaurant- i ndustry standards. Comparable deals have fetched nine times EBITDA, according to Bloomberg.
Panera rose as much as 14 per cent to US$ 312.98 in New York after the acquisition was announced. Shares of the St. Louis- based company were already up 34 per cent this year, fuelled partly by the deal speculation.
Starbucks was the first suitor to express takeover interest in Panera, two people familiar with the situation have told Bloomberg. Starbucks is seeking ways to generate more money from food, and buying a bakery chain with more than 2,000 cafés across the U. S. and Canada would give it a massive presence in the category. But the coffee giant has shied away from blockbuster deals. Its biggest transaction so far was the purchase of Teavana for about US$600 million.
It also bought the bakery chain La Boulange for about US$ 100 million in 2012, but Starbucks shut that down in 2015. Starbucks still sells La Boulange- branded pastries in its cafés.
Panera, meanwhile, has about US$ 5 billion in systemwide sales. It’s expanded steadily in recent years, growing from a single store in Boston to become one of the largest fast-casual competitors.