News that Luxembourg-based investment firm JAB Holding Company has purchased another consumer-oriented household name is no longer a shocker, but the deals still make headlines. Wednesday morning JAB announced that it has agreed to buy Panera Bread Co. (NASDAQ: PNRA) for a total of around $7.4 billion, including Panera’s debt. The deal is expected to close in the third quarter of this year.
JAB is paying a 20% premium to Panera’s closing price on March 31, or $315 per share in cash. Following the completion of the transaction, Panera will be privately held and operated independently by its current management team.
Olivier Goudet, JAB partner and CEO, said:
We strongly support Panera’s vision for the future, strategic initiatives, culture of innovation, and balanced company versus franchise store mix. We are excited to invest in and work together with the Company’s management team and franchisees to continue to lead the industry.
Last year, JAB acquired Krispy Kreme Doughnuts for about $1.35 billion and the year before that paid $13.9 billion for Keurig Green Mountain. JAB owns other well-known consumer brands such as Einstein Noah bagels, Peet’s Coffee, Caribou Coffee, Stumptown Coffee and a controlling interest in Coty Inc. (NYSE: COTY).
One potential buyer for Panera was rumored to be Starbucks Corp. (NASDAQ: SBUX). JAB’s acquisitions over the past several years have likely put a crimp in the Seattle company’s hopes to improve its European business. In fiscal 2016, Starbucks’ revenues in its Europe, Middle East, and Africa (EMEA) segment fell 8% to $1.1 billion and operating margin fell by 30 basis points to 13.5%.
Starbucks, however, has just installed a new CEO, and the company has been focused on boosting its premium coffee business. The company also was unlikely to cough up the cash to compete with JAB; Starbucks paid $620 million for Teavana in 2012 in its last large acquisition.
Panera stock traded up more than 14% Wednesday morning to a new 52-week high of $312.98. The 52-week low is $185.69, and the consensus price target on the stock had been $261.82.