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Panera Bread Agrees to JAB Holding Buyout

- By Sydnee Gatewood

Panera Bread Co. (PNRA) announced April 5 it has entered a definitive merger agreement with JAB Holding Co., a European investment fund based in Luxembourg.

JAB has agreed to pay $315 per share in cash to take over the popular restaurant chain, a total consideration of $7.5 billion.

Shares rose 14% to $312.94 after the announcement.


Panera founder, Chairman and CEO Ron Shaich praised the deal, saying it was a "direct reflection" of the company's efforts to become one of the best-performing restaurant stocks in the past 20 years. In addition, he commented on the value it has created for shareholders.

"Our success for shareholders is the byproduct of our commitment to long-term decision making and operating in the interest of all stakeholders, including guests, associates and franchisees," Shaich said. "We believe this transaction with JAB offers the best way to continue to operate with this approach. We are pleased to join with JAB, a private investor with an equally long-term perspective, as well as a deep commitment to our strategic plan."

JAB Holdings partner and CEO Olivier Goubet also expressed his excitement for the deal, remarking how he has long admired Panera's strong business and success.

"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."

The Missouri-based company has a market cap of $7.1 billion; its shares were trading around $312.51 on Thursday with a price-earnings (P/E) ratio of 50.5, a forward P/E ratio of 40.8, a price-book (P/B) ratio of 25.1 and a price-sales (P/S) ratio of 2.6.

Among the gurus invested in Panera, Ron Baron (Trades, Portfolio) has the largest holding with 2.7% of outstanding shares, which represents 0.7% of his total assets managed. Steven Cohen (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Caxton Associates (Trades, Portfolio), John Hussman (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) also have positions.

The transaction is expected to close during the third quarter of 2017. After closing, Panera will be a private company and will be independently operated by the management team.

Disclosure: I do not own any stocks mentioned in the article.

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This article first appeared on GuruFocus.