Panera Bread, considered a leader in online ordering of high end fast food, is purchased for $7bn
JAB Holding Company, a Luxembourg-based company, is expanding its empire of coffee-related brands with the acquisition today (April 5) of publicly traded Panera in a deal worth more than $7bn, the investment firm that controls the Krispy Kreme chain announced.
JAB will pay $315 per share and assume $340m in debt, USA Today reports. Panera shares jumped 14.1% in pre-market trading to $312.49.
Bob Derrington, managing director and senior research analyst at the Telsey Advisory group, said Panera’s strong digital platform was attractive to JAB, who also owns other breakfast and coffee shops, including Caribou Coffee, Peet’s Coffee and Tea and Einstein Bros. Bagels. With table service chains losing customers at a rate of 2% this year, according to research firm NDP Group, and the rise of the fast and casual competitors like Panera, which handles about 24% of its sales online, the company has the technology in place that other shops do not.
“The company has some of the best fundamentals in the industry," Derrington noted. “There's a number of pieces to Panera's story that, I think, for a strategic buyer make an awful lot of sense, especially the technology, the digital platform the company has, the loyalty program. It's a great fit,” Derrington said. “The technology piece that Panera essentially brings to [JAB] is the crown jewel that really benefits the business.”
UBS analyst Dennis Geiger said Tuesday in a note to investors that "the rationale for a potential sale at this time is understandable," given Panera's success, products, loyal customers and leadership.
When the Panera brand began major expansion in 1999, it shook up the restaurant industry, introducing higher quality ingredients than fast food competitors, making WiFi widely available and giving customers healthy options. The company has stayed ahead of the technological curve by introducing digital ordering earlier than many competitors.