* Deal for $7.2 bln, or $7.5 bln including debt
* Panera shares hit record of $312.98 vs offer of $315
* Wedbush says offer high enough to deter other suitors
* JAB is world's No.1 pure-play coffee maker by volume
(Adds Breakingviews link)
By Anya George Tharakan and Gayathree Ganesan
April 5 JAB Holdings, the owner of Caribou
Coffee and Krispy Kreme Doughnuts, said on Wednesday it would
buy bakery chain Panera Bread Co for $7.2 billion, as
it expands its coffee and breakfast empire through the
biggest-ever U.S. restaurant deal.
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.
Panera has about 2,000 bakery cafes in the United States and
its fresh offerings appeal to health-conscious consumers. It has
been ramping up its loyalty program, rolling out kiosks to cut
customers' waiting times and has expanding its delivery service.
Shares of St. Louis-based Panera jumped 14.2 percent to a
record high of $312.98. JAB offered $315 per share in cash, a
20.3 percent premium to the stock's closing price on March 31,
the last trading day before media reports of a potential deal.
"We view the acquisition as strategically compelling for JAB
... we view the acquisition price as high enough to preclude a
competing financial suitor," Wedbush Securities analyst Nick
Setyan said in a note.
Setyan said JAB's offer was largely in-line with multiples
it has paid for its acquisitions, including Peet's Coffee & Tea
and Caribou Coffee.
The acquisition of Panera will be the second-biggest
restaurant deal in North America after Burger King's $11.53
billion purchase of Canadian coffee chain Tim Hortons, according
to S&P Global Market Intelligence.
Panera has reported better-than-expected earnings per share
for the last six quarters. On Wednesday, it reported preliminary
first-quarter company-owned sales-store growth of 5.3 percent,
which Setyan said comfortably beat Wall Street's expectations.
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
JAB became the world's largest pure-play coffee maker by
volume in 2015, when it created the Jacobs Douwe Egberts joint
venture by combining its D.E. Master Blenders 1753 business with
the coffee business of Mondelez International Inc.
JAB will also assume about $340 million of Panera's net
debt, valuing the deal at $7.5 billion, the companies said in a
joint statement. They expect the deal to close in the third
Panera founder and Chief Executive Ron Shaich and entities
affiliated to him have agreed to vote shares representing about
15.5 percent of the company's voting power in favor of the deal.
Panera is being advised by Morgan Stanley & Co LLC and
Sullivan & Cromwell LLP is providing legal counsel. Skadden,
Arps, Slate, Meagher & Flom LLP is advising JAB.
(Reporting by Anya George Tharakan and Gayathree Ganesan in
Bengaluru; Editing by Martina D'Couto and Savio D'Souza)