M&A Alert High as $7.5B Bid Marks End of an Era for Panera Bread’s Shaich

Panera Bread has agreed to be acquired by the owner of Caribou Coffee and Krispy Kreme Donuts for $7.5 billion, marking a new epoch for CEO Ron Shaich, who co-founded the bakery chain more than three decades ago.

Shaich has agreed to sell his 15.5% stake in Panera in the deal, according to a statement released this morning by the bidder, JAB Holdings. The Luxembourg-based company, controlled by Germany’s Reimann family, offered a 20% premium to Panera’s last closing share price on March 31, when talk of a possible deal first began to surface.

Shaich will continue to assume management duties at Panera, which he helped grow into a nationwide operation with around 2,000 stores. The company’s deep digital penetration, which accounts for around a quarter of its sales, and high loyalty-program engagement may have made it an especially tasty morsel for JAB to pursue.

“We strongly support Panera’s vision for the future, strategic initiatives, culture of innovation and balanced company versus franchise store mix,” JAB CEO Olivier Goudet said. “We are excited to invest in and work together with the company’s management team and franchisees to continue to lead the industry.”

The deal will be watched closely by incoming Starbucks CEO Kevin Johnson, who only got his feet under the desk on Monday. It will position JAB as an even more powerful competitor, given it also controls Peet’s Coffee & Tea, Stumptown Coffee Roasters, Keurig Green Mountain and Jacobs Douwe Egberts, among other holdings.

The deal also indicates that takeover activity in the consumer goods sector remains hot following last year’s mega-merger between beer brewers ABInBev and SABMiller and Kraft Heinz’s failed attempt to buy Unilever. Other recent deals in the sector include Reckitt Benckiser’s takeover of Mead Johnson and Luxottica’s merger with Essilor.

Boards are being inspired by a focus on cost reduction to drive margin improvement and earnings growth, according to KPMG. Big companies also are attempting to acquire fast-growing smaller players to tap growing customer preferences for the kind of “healthy-snacking” products that Panera Breads provides.

As Western economies improve and the share market continues to soar, KPMG predicts that the capacity of companies in the consumer discretionary and consumer staples sectors to fund acquisitions will improve over the next 12 months by 16% and 10%, respectively.

“The high-profile deals we’ve seen in recent months are indicative of an ongoing move toward consolidation,” said James Murray, the consultancy’s head of consumer goods M&A.