Subway To Be Acquired By Roark Capital For $9
Sandwich chain Subway on Thursday said it will be sold to private equity firm Roark Capital, and has entered into a definitive agreement for the same. Though it has not disclosed financial details about the deal, a Reuters report pegged it at $9.55 billion.
In a company statement, Subway CEO John Chidsey said, “This transaction reflects Subway's long-term growth potential, and the substantial value of our brand and our franchisees around the world. Subway has a bright future with Roark, and we are committed to continuing to focus on a win-win-win approach for our franchisees, our guests and our employees."
The transaction comes on the heels of Subway announcing its 10th consecutive quarter of positive same-store sales.
“The company will continue to execute its strategy with a focus on sales growth, menu innovation, modernisation of restaurants, overall guest experience improvements, and international expansion," Subway said in the statement.
JPMorgan is serving as financial advisor and Sullivan & Cromwell LLP is serving as legal counsel to Subway. Timing is subject to regulatory approvals and customary closing conditions.
Roark is a private equity firm with $37 billion in assets under management.
Subway, which has dual headquarters in Miami and Connecticut in the US, has about 37,000 restaurants in over 100 countries. It was founded in 1965 and is still owned by its founding families.
However, in the US, it has been losing market share in recent years to fast-growing rivals like Panera and Firehouse Subs, which feature more varied menus and newer stores. Subway has been trying to catch up; in 2021 it refreshed its menu and last year it announced a line of chef-developed sandwiches.
According to a Reuters report quoting sources, Subway will sell itself to private equity Roark Capital for $9.55 billion after agreeing to attach conditions to some of the windfall the two families that own it will get, ending a long-drawn auction that saw several competing bids.
These conditions, known as an earn-out, defer payment on part of the deal consideration, the sources familiar with the matter said. For the full price to be paid, Subway's cash flow would need to reach certain milestones over a specified period after the deal closes, they said.
The deal was valued at $8.95 billion, excluding the earn-out target, the report said. Roark beat out a late challenge from a rival bidding group led by TDR Capital and Sycamore Partners, which submitted a final bid of $8.75 billion or $8.25 billion excluding an earn-out, according to people familiar with the matter.
“Roark brings more to the table than other investors would have," said Neil Saunders, managing director of GlobalData. Its experience of helping restaurant brands grow will be helpful, “especially in the U.S. market where it remains well below the peak it hit a few years ago", he said.
In February, Subway had said it was exploring a possible sale, drawing interest from private equity firms including Roark, Advent International, TDR Capital and TPG as well as Goldman Sachs' asset management arm.
Sandwich chain Subway sold to Roark Capital for $9
Popular sandwich chain Subway is selling itself to private equity firm Roark Capital for $9.55 billion. The deal ends a long-drawn auction that saw several competing bids and comes with several conditions that defer payment on part of the deal consideration.
Founded in 1965, Subway is still owned by its founding families. Over the years it has become one of the world's largest restaurant chains, with 37,000 outlets in more than 100 countries. According to a Reuters report citing sources the company has attached some conditions to some of the windfall the two families that own it will get.
The deal was valued at $8.95 billion, excluding the earn-out target. In order for the full price to be paid, Subway's cash flow would need to reach certain milestones over a specified period after the deal closes.
A press note from the sandwich maker said that the deal would combine the chain's “global presence and brand strength with Roark's deep expertise in restaurant and franchise business models".
The private equity firm has around $37 billion in assets under management and specialises in franchised businesses. It owns multiple restaurant chains, including Arby's, Dunkin' and Buffalo Wild Wings.
(With inputs from agencies)
Source: Live Mint
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Dare to Change Your Legal Name to
US-based global restaurant chain Subway has received a tremendous response to its offer of a lifetime of free sandwiches to Americans willing to legally change their first name to “Subway." In just four days, nearly 10,000 people have stepped forward to embrace this unusual challenge.
The selected winner among these participants will receive USD 50,000 in gift cards along with an additional USD 750 to cover the expenses associated with the name change, Forbes reported. The submission period for the competition, which is for US-based customers only, took place online from August 1 to 4. A winner will be randomly chosen later this month.
However, this is not the first instance that the American fast-food chain is going to extraordinary lengths for marketing.
Last year, a Subway enthusiast named James Kunz received a lifetime supply of sandwiches, equivalent to USD 50,000 in gift cards, after he acquired a 12-by-12-inch tattoo featuring the logo of Subway's “Subway Series" promotion, NBC reported. The company granted similar rewards to eight others who displayed 3-inch tattoos.
According to Forbes, this offer comes as Subway is looking at options for a corporate buyer. In February, the company engaged JPMorgan Chase as an advisor for a potential USD 10 billion sale. With approximately 37,000 sandwich shops globally, including 22,000 in the US, Subway stands as the largest restaurant chain in the U.S. in terms of locations.
Although its revenue peaked at USD 18 billion in 2012 due to an aggressive expansion strategy, this figure has declined in recent years, based on insights from an industry research firm cited by the Wall Street Journal.
Despite this, Subway reported notable accomplishments in 2022, including a record-setting year and a remarkable 9.2 percent surge in same-store sales compared to 2021, along with a substantial 29.1 percent increase over 2020.
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