JAB is acquiring the UK sandwich chain from private equity firm Bridgepoint Advisers.
Terms of the deal were not disclosed, however, close sources revealed JAB is expected to pay around £1.5bn ($2bn), including net debt.
The sale will be a lucrative one, representing a return of six times Bridgepoint’s initial investment of £364m ($483m) for Pret a decade ago.
Bridgepoint had purportedly been considering a US initial public offering of the sandwich chain but decided to take JAB up on its offer.
Pret opened its first store in London in 1986 and today operates 530 stores worldwide – three quarters of which are in the UK – which generated group revenues of £879m ($1.17bn) last year, the ninth consecutive year of like-for-like sales growth, according to CEO Clive Schlee.
The chain is opening in Berlin, Germany later this year, and has an eye on further expansion in China and Dubai, which will make it bigger than its nearest rivals Starbucks and Dunkin’ Brands in the US and Costa Coffee in the UK.
On completion of the sale – expected this summer – all 12,000 staff employed by Pret A Manger will receive a £1,000 ($1,327) bonus.
“The £1,000 bonus will be paid to all employees who are on the payroll during the week the deal completes. It’s serendipity for those who have just joined,” said Schlee.
“All of us at Pret believe JAB will be excellent long-term strategic owners,” he added.
Olivier Goudet, JAB partner and CEO, said his company would continue to cash in on management’s “proven track record” and invest in new products as consumer tastes evolve.
The growth of an empire
The Pret deal is the latest acquisition of several by JAB, the Luxembourg-based investment vehicle that manages the fortune of Germany’s billionaire Reimann family.
Run by Goudet, Peter Harf and Bart Becht, the company has invested more than $30bn to become the world's second-largest coffee business over the past five years, controlling packaged brands such as Kenco and Douwe Egberts, as well as chains Peet's and Espresso House.
It also holds shares in beauty firm Coty, luxury goods company Bally and consumer-goods maker Reckitt Benckiser, and recently agreed to take control of Dr Pepper Snapple Group.
“The Pret deal is the latest in a series of food and drink focused acquisitions by JAB, including the purchase of US bakery and sandwich chain Panera for 18 times its earnings and its $13.9bn outlay to add Keurig Green Mountain to its portfolio, the biggest group in the US single-serve coffee market,” commented Angus Grierson, MD of LGB Corporate Finance.
He noted that JAB’s purchase of Pret will allow the firm to capitalise on the brand’s continued evolution of one-dimensional offerings to more artisanal, innovative new products that respond to consumer desires for freshly prepared food and drink.
“The firm will use its extensive experience and increased scale to help Pret compete in a challenging market to gain a stronger foothold in the US, the world’s largest coffee market," said Grierson.