And there are a lot of costs an acquirer will slash, Jamba presently pays over a million annually for their corporate HQ lease in Emeryville not to mention the overpaid management team, who will be let go after an acquisition. I don't think there's much doubt that the company is being primed for a buyout, but this isn't a slam dunk, I'm not sure their business model is sustainable long term. In order for a Jamba location to achieve a decent AUV it has to be well placed, in other words, they have to compete with more profitable concepts for prime real estate -- if the store isn't on the main drag it is marginalized. The only beverage concepts I can think of which can afford to sit on well trafficked locations are coffee sellers, Jamba failed with their coffee offering. They were never successful in selling food or in becoming a lunch location either, Jamba is a seasonal business which sells expensive lower margin drinks. An acquirer might need to offer very attractive terms and incentives to attract quality store operators and would likely have to deal with high franchisee turnover. That being said, I think 18 to 20 bucks a share is possible if management keeps their promise to return excess capital to shareholders by aggressively buying back stock.
It was a dismal quarter in my opinion, their company SSS dropped almost 6 points! They blamed the free smoothie giveaway and the weather for the drop, so apparently they make more money when they give smoothies away for free. They also lowered their SSS guidance for the year -- I don't think the new product offerings are selling as well as they would have liked. When asked why David Peacock and the Vitaligent Group renegotiated their huge refranchising deal at the last moment all Mr. White could say was something like..."we want to make sure all of our deals close with excellence". They claim to be opening 100 new stores globally this year but they are closing stores almost as fast as they open them (net 7 openings so far this year)...notice when they mention new store openings they use the word gross instead of net.
If it wasn't for the activist intervention this stock would be trading in the single digits, the promise of stock buybacks and potential dividends are keeping them afloat. If Glenn Welling and Engaged Capital decide to bail on Jamba look out below.