Krispy Kreme Owner To Buy Panera Bread In $7.5 Billion Deal

JAB owns several coffee-related US brands, including Keurig Green Mountain, Krispy Kreme, and Caribou Coffee so Panera seems like a natural fit for the privately held German company.

The investment firm that owns Krispy Kreme, Caribou Coffee and other enterprises, is purchasing the Panera Bread Co. for $315 per share in cash - a premium of roughly 30 percent over its recent average trading price. Vetr downgraded Panera Bread from a buy rating to a hold rating and set a $214.00 target price for the a research note on Tuesday, December 27th. Comparable deals have fetched nine times Ebitda, according to data compiled by Bloomberg.

For days there had been speculation about a takeover at Panera, with Starbucks Corp. being suggested as the potential buyer. Its stock has risen almost 28 percent this year through last Friday, ahead of media reports on the talks.Panera, which has 2,000 bakery cafes throughout the United States, has worked to remove artificial colors and preservatives from its menu.

Founded in 1987, Missouri-based Panera Bread operates more than 2,000 bakery-cafes across the United States and Canada selling soups, salads, pasta, sandwiches, bakery items, coffee, teas, smoothies and frozen drinks.

"Panera is selling when it is doing fabulously well under current management", said Radhakrishnan Gopalan, professor of finance at Olin Business School.

JAB's acquisitions have been largely characterized by coffee and breakfast foods.

Panera's acquisition by JAB is expected to close during the third quarter of this year. Brands Inc's Taco Bell past year added a $1 breakfast menu.

Panera sales have increased 10 percent over the past two years, just ahead of the 8 percent growth in the number of stores. Shaich and entities affiliated with him have agreed to vote shares representing a 15.5 per cent stake in favour, they added.

BTIG analyst Peter Saleh told Reuters the deal would give Panera the flexibility to "invest more in technology, maybe to invest faster behind delivery, to make more investments in their food offering".

Panera was advised by Morgan Stanley and law firm Sullivan & Cromwell.

"Our success for shareholders is the byproduct of our commitment to long-term decision making and operating in the interest of all stakeholders, including guests, associates, and franchisees", said Panera founder and CEO Ron Shaich in a statement.

JAB Holding, together with JAB Consumer Fund, are headed by three senior partners: Peter Harf; Bart Becht, chairman; and Olivier Goudet, chief executive officer.

  • Leroy Wright