JAB Holding Acquires Panera Bread In A Mega Deal Worth $7.5 Billion

JAB Holding is acquiring Panera Bread in a deal worth approximately $7.5 billion. For every share of Panera, JAB will pay $315 in cash. This is a 30% premium on the 30-day-volume-weighted share price of Panera as of the last day of March this year which was the last day of trading prior to news of a potential sale breaking. The acquisition will be done through the investment arm of JAB – JAB BV.

Following the announcement, the chief executive officer, founder and chairman of Panera Bread, Ron Shaich, said that in the more than two decades that the company had existed as a publicly traded one, it had created significant value to shareholders and the acquisition would do the same.

“Today’s transaction is a direct reflection of those efforts, and delivers substantial additional value for our shareholders,” said Shaich in a statement.

Total debt

In the last two decades the stock of Panera has emerged as one of the best performing among restaurant stocks as it has appreciated by more than 8,000%. As part of the deal, JAB will take up Panera’s debt totaling $340 million.

If approved by the shareholders of Panera Bread and the regulators, the deal is expected to be completed in the third quarter. Shaich will continue serving as CEO even after the acquisition as the Luxembourg-based JAB Holdings prefers to give control to a local executive team.

JAB’s interest in Panera Bread came as no surprise as its acquisitions have been mostly firms dealing in breakfast and coffee foods. Its coffee business has expanded rapidly since 2012 when it acquired D.E Master Blenders 1753 NV, an Amsterdam, Netherlands-based firm that is known for the Douwe Egberts and Senseo brands.

The other suitor

Before the deal, Starbucks was also rumored to be interested in Panera Bread, according to sources who spoke to Bloomberg. The Seattle, Washington-based coffee chain is understood to be searching for new avenues of growth and this includes generating more revenues from solid food items. Acquiring a bakery chain that has in its portfolio over 2,000 outlets in North America would have been a huge boost. However, Starbucks is known to avoid mega deals with its largest acquisition ever being Teavana which it bought for $600 million.

Another Starbucks’ acquisition was La Boulange, a bakery chain which it purchased for approximately $100 million five years ago. Though the coffee chain still sells pastries that are branded La Boulange in its cafes, Starbucks shut down the bakery chain two years ago.