Sandwich chain Subway has retained advisers to discover a sale of the intently held firm, in accordance with individuals acquainted with the state of affairs.
The method, which is within the early phases, is anticipated to draw potential company consumers and private-equity corporations, and will worth Subway at greater than $10 billion, the individuals stated. Nonetheless, it’s potential there received’t be a sale or different deal.
“As a privately held firm, we don’t touch upon possession construction and enterprise plans,” Subway stated. “We proceed to be targeted on transferring the model ahead with our transformational journey to assist our franchisees achieve success and worthwhile.”
Milford, Conn.-based Subway, recognized for its foot-long sandwiches and quick-service eating places, has been owned by its two founding households for greater than 5 a long time.
Subway’s roughly 21,000 U.S. areas did $9.4 billion in gross sales in 2021, up 13% from the 12 months prior because the chain recovered from the pandemic and operational enhancements boosted gross sales, in accordance with trade analysis agency Technomic. The corporate had round 37,000 shops world wide as of 2021 and was the largest restaurant chain by U.S. areas.
It grew to become one of many world’s largest restaurant chains by aggressively constructing new areas, however stumbled within the final decade. The chain’s international gross sales peaked at $18 billion in 2012, declining for years after, Technomic stated. Shops closed and franchisees exited the system, whereas new sandwich-shop rivals proliferated.
It had been run by late co-founder Fred DeLuca for a lot of a long time, earlier than he was recognized with leukemia, and his sister Suzanne Greco took the reins of the corporate. (She retired in 2018.) Peter Buck, who lent Mr. DeLuca $1,000 to open a sandwich store in Bridgeport, Conn., in 1965 and helped co-found the chain, died in 2021.
John Chidsey, the chain’s first chief govt officer to come back from outdoors of Subway’s two founding households, has labored to show across the chain since taking the helm in November 2019. He has closed areas, restructured firm operations and targeted on Subway’s menu and meals high quality.
Mr. Chidsey has stated he anticipated Subway’s U.S. areas to stage off whereas increasing extra overseas.
Mr. Chidsey stated in an interview final 12 months that he had slashed company workers to get Subway extra in keeping with friends. Subway additionally moved many company workers to Miami from its longstanding headquarters in Connecticut.
The sandwich chain stated in October that its same-store gross sales rose 8.4% in its third quarter in contrast with the identical interval in 2021. The corporate stated the menu modifications helped to spice up gross sales, together with efforts to renovate eating places and enhance on-line ordering.
A deal for Subway can be a shiny spot for M&A, which has been lackluster as market volatility and fears of a recession take their toll. Deal quantity dropped by 41% within the U.S. final 12 months to $1.5 trillion, in accordance with Dealogic. The retail sector has been significantly challenged, as shoppers change their spending habits following the pandemic.
A non-public-equity buyout, nevertheless, might be difficult by the difficult marketplace for leveraged loans, which many corporations use to assist help their largest offers. Many banks have pulled again their lending, as billions of {dollars} of hung debt sits on their steadiness sheets. Personal-equity corporations have been seeking to non-public lenders as a supply of capital for offers, however their skill to finance giant transactions is proscribed.
Supply: Live Mint