MW Watch out for more Jersey Mike's sub shops as it win backing from private-equity giant Blackstone
By Steve Gelsi
New Jersey-based sub giant, reportedly valued at $8 billion, aims to grow beyond 3,000 locations in the U.S.
Jersey Mike's Subs already had a national presence with 3,000 locations, but the maker of fresh subs looks for a rapid expansion with backing from the largest U.S. private equity firm, Blackstone Inc.
"We believe we are still in the early inning of Jersey Mike's growth story," Peter Cancro, the founder of the Manasquan, N.J.-based company said Tuesday, said as he announced the decision to team up with Blackstone Inc. $(BX)$.
The deal values the sandwich chain at $8 billion, according to a report by The Wall Street Journal. A Blackstone spokesperson did not comment.
Cancro will retain a significant equity stake in the company.
Cancro started working for the company at age 14 on Point Pleasant on the Jersey Shore and bought that location when he turned 17 in 1975. He's been franchising the name since 1987.
The original business, Mike's Subs, was founded in 1956.
The role of Blackstone suggests that an initial public offering could be in the cards for Jersey Mike's, or the firm could opt to sell it to a larger company. Private-equity firms typically own portfolio companies for less than 10 years.
Blackstone acquired Hilton Worldwide $(HLT)$ in 2007 and took it public in 2013, for example, in what the private-equity firm has described as one of its most profitable investments.
With the Hilton and other deals such as Servpro, and recent restaurant transactions including 7Brew and Tropical Smoothie Cafe, "Blackstone is the right partner to help us reach even greater heights," Cancro said.
Jersey Mike's already ranks as one of the largest sandwich gains in the U.S. which was fourth after Subway, Panera Bread, and Arby's, according to QSR.
Blackstone expects to complete the deal in early 2025. Blackstone said its private-equity strategy for individual investors is also set to invest in Jersey Mike's as part of the transaction.
Guggenheim Securities and Morgan Stanley & Co. LLC are advising Jersey Mike's.
Barclays and Bank of America are working with Blackstone.
Blackstone's stock has risen nearly 40% so far in 2024, while the S&P 500 has risen by 23.6%.
-Steve Gelsi
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November 19, 2024 08:27 ET (13:27 GMT)
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