British Sandwiches to Land on Wall Street as Pret Plans IPO

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  • Pret could fetch a value of about 1.5 billion pounds in IPO
  • Company has also been approached by bidders including JAB

After opening shops across New York, U.K. sandwich and coffee chain Pret A Manger may be heading for Wall Street.

Private equity firm Bridgepoint Advisers is considering a U.S. initial public offering of the provider of tuna, mayo and cucumber baguettes and organic coffee this year, according to people familiar with the situation.

Bridgepoint could seek a valuation of more than 1.5 billion pounds ($1.9 billion) based on listed peers ranging from Starbucks Corp. to Shake Shack Inc., two of the people said, asking not to be identified because the deliberations are private. It’s early days and the number could change based on investor feedback, they said.

The company has also been approached by bidders, including JAB Holding Co., aiming to preempt the process, the people said. No final decisions have been made and Bridgepoint may still decide against a listing or sale, they said.

By looking at listing in New York rather than London, where Pret is based, the company is signaling its intention of making a bigger push into the rapidly expanding U.S. market for healthier alternatives to burger chains and other fast-food outlets. Activity in the sector has been fueled by deals such as JAB’s plan to buy soup and sandwich chain Panera Bread Co.

Pret is “one of the standout brands in the lighter and healthier grab-and-go market and it certainly has phenomenal potential to go global,” Jeffrey Young, managing director at industry consultant Allegra Group, said by phone.

The U.S. market for coffee-shop chains, including brands such as Tim Hortons and Dunkin Donuts, is set to reach $85 billion by 2025 as customers increasingly eat out for breakfast, according to an October report from Allegra. At the end of 2016, Pret had 444 shops globally: 329 in the U.K., 74 in the U.S., 19 in Hong Kong, 19 in France, two in China and one in Dubai.

Brexit Crunch

By expanding in the U.S., Pret could accelerate its geographical diversification at a time when its U.K. operations face a possible squeeze from Brexit. The sandwich chain has said only about one in 50 U.K. job applicants are British. It’s taking steps to try to address a possible staff crunch if leaving the European Union results in immigration curbs, as the government of Prime Minister Theresa May has vowed.

An exodus of jobs from London’s financial district could also affect the chain’s core clientele of office workers. Whitbread Plc, owner of the U.K.’s Costa chain, forecasts 91 percent growth in the number of coffee outlets in the country, to 27,412, from 2010 to 2020.

Pret said last month that it planned to reach 500 outlets globally within a year. It said U.S. sales exceeded 200 million pounds, out of a total of 776.2 million pounds for the chain in the year ended Dec. 29.

Bridgepoint is working with advisers at JPMorgan Chase & Co., Jefferies Group LLC, Credit Suisse Group AG, Barclays Plc and Piper Jaffray Cos on the potential listing, the people said.

A representative for Bridgepoint said the firm is always exploring opportunities to ensure the future growth of Pret and will update the market if they materialize. JPMorgan, Barclays, Credit Suisse, Jefferies and JAB declined to comment. A representative for Piper Jaffray didn’t immediately respond to requests.

McDonald’s Stake

Bridgepoint bought Pret in 2008, eight years after the chain entered the U.S., acquiring it from founders Sinclair Beecham and Julian Metcalfe as well as McDonald’s Corp., which held a 33 percent stake at the time.

JAB, an investment vehicle of the billionaire Reimann family, has fueled deal activity in the sector with a series of acquisitions, including coffee chain Keurig Green Mountain Inc., doughnut baker Krispy Kreme Doughnuts Inc. and, most recently, Panera.

Companies in the U.S. have raised about $20 billion from IPOs this year, nearly 10 times more than those in the U.K., as concerns about the impact of the U.K.’s decision to leave the EU and elections in key European economies hit investor appetite, according to data compiled by Bloomberg.

— With assistance by Alex Barinka, and Thomas Buckley

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