JAB buys US bakery chain Panera Bread

NEW YORK: JAB Holding Co agreed yesterday to buy Panera Bread Co for about $7.5 billion, adding a fast-growing US bakery chain to a food empire that spans coffee, bagels and doughnuts.

The planned purchase by JAB, an investment vehicle of Austria’s billionaire Reimann family, steps up its challenge to Nestle SA and Starbucks Corp in the coffee-shop business, giving it greater access to the lunch and dinner crowd. In addition to sandwiches and salads, Panera offers drinks like iced caramel lattes and agave lemonade.

“Panera investors will receive $315 per share in cash,’’ the companies said in a statement. That’s 20% higher than the closing price on March 31, the last trading day before Bloomberg reported Panera was considering a sale after receiving interest.

“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,” Panera founder Ron Shaich said in the statement.

The agreement, which includes assumption of $340 million in debt, values Panera at 19 times earnings before interest, taxes, depreciation and amortisation, compared with nine times Ebitda for comparable deals, according to data compiled by Bloomberg. Panera shares rose as much as 13% to $310 in pre-market trading.

Panera adds another US brand to JAB’s growing caffeine roster, which includes Stumptown Coffee Roasters, Keurig Green Mountain, Krispy Kreme Doughnuts and Peet’s Coffee & Tea.

JAB has expanded its coffee business rapidly after an initial 2012 purchase of a stake in Amsterdam-based D.E Master Blenders 1753 NV, the maker of Senseo and Douwe Egberts brands.

In the US, JAB has developed a portfolio of co-branded restaurants called Coffee & Bagels, offering Caribou java and Einstein Bros Bagels.

JAB also has controlling stakes in cosmetics company Coty Inc and luxury goods maker Ji mmy Choo among other companies.

Starbucks was the first company to express takeover interest for Panera, two people familiar with the situation have told Bloomberg.

The bakery chain, which operates more than 2,000 cafes across the US and Canada, has grown steadily in recent years from a single store in Boston, becoming one of the largest operators in the fast casual segment.

The purchase is expected to close in the third quarter, subject to shareholder and regulatory approvals.