Wednesday morning JAB announced that it has agreed to buy Panera Bread Co. Shaich believes that Panera’s main competitive advantage has been focusing on the bigger picture.
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JAB Holding Co, the owner of Keurig Green Mountain and Caribou Coffee, yesterday struck a deal to buy U.S. bakery chain Panera Bread Co for $7.2 billion, including debt of $340 million. The company also was unlikely to cough up the cash to compete with JAB; Starbucks paid $620 million for Teavana in 2012 in its last large acquisition.
Being out of the public eye would allow the company to work toward long-term goals without the pressure of having to show results quarter to quarter. “So I think in terms of technology and their loyalty card, their well ahead of their peers”, he said. “In terms of why now, I can not think of any reason other than Chief Executive and founder Ron Shaich wanting to exit and possibly do something else”.
“We are taking market share”, he said. “This is going to help us take more market share”.
The group that owns Krispy Kreme, JAB Holding Co., has agreed a deal to purchase Panera Bread for $7 billion, via Sun Sentinel. The stock now has an average rating of “Hold” and an average target price of $247.06. The company considers itself the best-performing restaurant stock over the past 20 years, with its shares gaining by more than 8,000 percent. During the same period in the prior year, the business posted $1.88 earnings per share. Toy maker Mattel rose 44 cents, or 1.8 percent, to $25.41.
In addition to Krispy Kreme, JAB owns coffee and breakfast companies from Jacobs Douwe Egberts and Peet’s Coffee Tea to Einstein Bros.
On the retail front, JAB’s brands are quite varied.
Many industry watchers couldn’t see anyone paying Panera’s lofty valuation-the stock traded at 15 times EBITDA just a week ago after a steady climb.
Shaich seems particularly excited to no longer have to deal with activist investors, which have been known to invade the restaurant industry to clamor for change. The CEO told CNBC last week he has no plans to retire.
“Panera is selling when it is doing fabulously well under current management”, said Radhakrishnan Gopalan, professor of finance at Olin Business School. “They are very committed to long term decision making”. It operates through three segments: Company bakery-cafe operations, franchise operations, and fresh dough and other product operations. “They’re committed to our team”.