- Subway is for sale for more than 10 billion dollars.
- So far, they have offered less, which is why the company presented a financing plan of 5 billion dollars to tempt them to increase the number.
- Subway has experienced declining sales and suffered from store closures and franchisee departures in recent years.
At the beginning of 2023, in Merca2.0 we published that Subway was for sale.
We said it had engaged specialist advisers to explore a sale of the privately held company and that the process, which was in the early stages in January, was expected to attract potential corporate buyers and private equity firms.
There was talk of a valuation of more than 10 billion dollars.
The novelty this April 30 published by Reuters is that the bankers in charge of the Subway sale have presented private equity firms looking to acquire the sandwich chain with a $5 billion financing plan.
The purpose is to overcome a difficult environment for leveraged buyouts and achieve the price of more than 10 billion requested by the firm.
Interest rates have risen and concerns about an economic slowdown have made debt more expensive and less available to buyout firms chasing deals, affecting the value of Subway’s bids.
JPMorgan Chase & Co, financial adviser to Subway, hopes the $5 billion debt financing package will show potential buyers that they can borrow enough to structure an attractive deal, even at a valuation higher than the $10 billion requested. .
So far, the offers have oscillated between 8,500 and 10 billion dollars, according to the same outlet.
subway is for sale
Subway, based in Milford, Connecticut, in the United States alone generated $9.4 billion in sales in 2021, 13 percent more than in 2020.
Subway’s global sales peaked in 2012, at $18 billion, but declined in subsequent years, says a Technomic report released by WSJ.
Since then, there have been store closures and the departure of franchisees.
Subway reported in early April that its global sales in the first quarter of 2023 grew 12 percent compared to the same period in 2022.
He also said that customer visits also grew, hand in hand with the strategy of renewing the points of sale.
Subway has in some markets the problem of strong direct competition from restaurants such as Jimmy John’s, Firehouse Subs, Jersey Mikes Subs and Potbelly Corp.
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