New Delhi: According to an agency report, Atlanta-based private equity firm Roark Capital will acquire the sandwich chain Subway in a deal valued over $9 billion, ending a long-drawn auction that saw several bids from buyout firms. With $37 billion in assets under management, the purchase will elevate Roark Capital to the status of one of the world’s largest restaurant operators.
It controls Inspire Brands, the owner of restaurant chains including Jimmy John’s, Arby’s, Baskin-Robbins and Buffalo Wild Wings. On Thursday (24th September), Subway confirmed that it has entered into a definitive agreement to be acquired by affiliates of Roark Capital for an undisclosed price. However, citing sources, the report pegged the sale to be $9.6 billion following a robust bidding process between rivals like TDR Capital and Sycamore Partners.
“This transaction reflects Subway’s long-term growth potential and the substantial value of our brand and our franchisees around the world,” said John Chidsey, CEO of Subway. “Subway has a bright future with Roark, and we are committed to continuing to focus on a win-win-win approach for our franchisees, our guests and our employees.”
The deal, which combines Subway’s strength in its brand and global footprint with Roark’s in-depth knowledge of restaurant and franchise business models, marks a significant turning point in the multi-year transformation journey of Subway. Roark focuses on investments in consumer and business service companies, with a specialisation in franchise and franchise-like businesses, and prides itself on being a trusted partner for management and business owners.
The deal comes on the heels of Subway announcing its 10th consecutive quarter of upbeat same-store sales. The company will keep implementing its strategy with a focus on sales growth, menu innovation, restaurant modernisation, overall guest experience improvements, and international expansion.
Subway has Sullivan & Cromwell LLP as its legal counsel and JP Morgan as its financial advisor. Regulatory approvals and customary closing conditions will affect the timing. As one of the world’s largest quick-service restaurant brands, Subway serves freshly made-to-order sandwiches, wraps, salads and bowls to millions of guests across more than 100 countries in nearly 37,000 restaurants daily.
In the first half of 2023, the company’s same-store sales increased by 9.85 per cent. According to a report from an agency, its 12-month earnings before interest, taxes, depreciation and amortisation are around $800 million.
