Krispy Kreme-owner JAB to buy bakery chain Panera Bread

Wed Apr 5, 2017 2:20pm EDT
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By Anya George Tharakan and Gayathree Ganesan

(Reuters) - JAB Holdings, the owner of Caribou Coffee and Krispy Kreme Doughnuts, said on Wednesday it would buy bakery chain Panera Bread Co (PNRA.O: Quote) 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.   Continued...

A Panera restaurant logo is pictured on a building in North Miami, Florida March 19, 2016. REUTERS/Carlo Allegri