In 2012, a private investment group known then as Joh. A. Benckiser, or JAB, acquired Peet’s Coffee for about $1 billion.
That price represented about 21 times Peet’s earnings, a remarkable multiple for a restaurant acquisition. But JAB was a relative newcomer to the U.S. restaurant market at the time, and the firm had long-term goals that made such multiples less relevant. It was a different type of investment firm, in other words.
And that’s how it would be over the next five years. JAB went on to make numerous acquisitions in the restaurant space, often paying prices above where others would go. It soon bought another coffee concept in Caribou, then made deals for Einstein Bros Bagels and then its chief rival Bruegger’s. It acquired Krispy Kreme and then funded that chain’s acquisition of Insomnia Cookies.
Four years ago JAB bought Panera Bread for $7.5 billion, or a multiple of 18, and then acquired its former sister chain in Au Bon Pain. It also bought Pret a Manger.
Lately, however, JAB has been acting a lot like most private equity firms, largely by taking a bunch of companies public.
In 2019 JAB merged the European coffee company Jacobs Douwe Egberts with Peet’s and the next year took the company public in Amsterdam.
This year, JAB decided to take Krispy Kreme public. And then this week Panera sold Au Bon Pain to a Yum Brands franchisee.
That deal certainly has the look of a precursor to a Panera Bread IPO. Both the New York Times and Bloomberg have reported that JAB is considering an offering of the bakery/café chain. The public markets are likely to look more favorably upon such a company if it doesn’t include a bolt-on concept that is a theoretical competitor.
A lot of this appears to be opportunistic. The market for initial public offerings remains hot, with blank-check companies that dominated the market earlier in the year having given way to more traditional offerings.
The number of IPOs have tripled this year from 2020, according to Renaissance Capital. A favorable market and some pent-up demand by sponsors is likely driving the market.
JAB, for what it is worth, is also reportedly considering an IPO of its pet care unit, so it’s not simply making moves with its restaurant holdings.
Still, this is a massive shift for the firm from the way it acted during that five-year period when it was basically buying everything while driving up valuations. JAB almost single-handedly drove up the going rate for restaurant companies, even when public equity investors refused to grant such prices—which led to a number of take-private deals.
But now that pendulum has swung back toward the public markets. And JAB, like any other investment firm, is taking full advantage.