What do Panera and Krispy Kreme have in common?
- Author: Leroy Wright Apr 06, 2017,
Apr 06, 2017, 8:07
After much speculation on Monday, JAB Holdings and Panera Bread Co (NASDAQ: PNRA) agreed to merge in a $7.5 billion deal in which Panera's shareholders will receive $315 per share in cash. Without all that, I doubt the $7.5 billion acquisition by Joh A. Benckiser (JAB) would have happened at all.
In records going back to 1971, the only North American restaurant deal bigger than the sale of Panera was the buyout of Tim Hortons in 2014 by the parent company of Burger King, run by 3G Capital, according to FactSet.
Yet what sets these acquisitions apart is the multiple.
"As far as the buyer is concerned, while there are potential synergies with the existing portfolio of JAB such as Krispy Kreme and even Keurig, one can not but imagine the timing as not being all that great, as Panera's stock has performed very well lately", Gopalan said.
Both are exceedingly high. Volatility makes major charm for active investors, so firm has 2.22% volatility for month and its performance in stock market been19.09%.
A number of other research analysts have also weighed in on PNRA.
Yet the price also demonstrates that these buyers see potential well beyond traditional norms. They are committed to our strategy.
In Popeyes, RBI clearly sees potential in its global growth strategies - which has been its MO since 3G Capital acquired Burger King back in 2010.
Starbucks Corp. was the first suitor to express takeover interest in Panera, two people familiar with the situation have told Bloomberg. "What started as one 400 square foot cookie store in Boston has grown to a system with over 2,000 units, approximately $5 billion in sales, and over 100,000 associates", said Panera Bread founder and CEO Ron Shaich. It is now looking at delivery. The Firm is a national bakery-cafe concept.
JAB also has non hospitality holdings, including popular shoe brand Jimmy Choo.
Still, the strong, long-term earnings potential would make it easy for JAB to make a profit on that multiple, whereas it would be far more hard for a traditional investment group with a five-year timeline. Zacks Investment Research lowered shares of Panera Bread from a "hold" rating to a "sell" rating in a research note on Tuesday, December 27th.
JAB, the investment vehicle of Germany's billionaire Reimann family, has built up an empire of coffee and food chains through a series of acquisitions in recent years, including that of K-cup coffee pod-maker Keurig Green Mountain Inc.
JAB's acquisition of Panera is the biggest-ever United States restaurant deal, according to S&P Global Market Intelligence.
And Darden (DRI) just announced last week it was buying casual dining chain Cheddar's Scratch Kitchen for $780 million.
The restaurant industry is competitive. Bath Savings Trust Co's holdings in Panera Bread were worth $374,000 as of its most recent SEC filing. He took the company public in 1999 and since then, the stock has outperformed the restaunt industry and wider S&P 500 index. Thrivent Financial for Lutherans now owns 3,730 shares of the company's stock worth $765,000 after buying an additional 220 shares during the period.