MANASQUAN, N.J. & NEW YORK - In a move poised to expand its footprint in the fast-casual dining sector, investment firm Blackstone (NYSE:BX) has secured a majority ownership position in Jersey Mike's Subs. The transaction, which is set to conclude in early 2025, will see the sandwich chain's Founder and CEO Peter Cancro retain a significant equity stake and continue at the helm of the company.
This partnership aligns with Jersey Mike's growth ambitions, potentially accelerating its U.S. and international expansion, while bolstering its technology and digital capabilities. Blackstone's track record includes successful growth facilitation for other franchisors like Hilton Hotels and SERVPRO.
Jersey Mike's, a national franchisor with over 3,000 locations in operation or development, has built its reputation on high-quality, freshly prepared submarine sandwiches. The company's growth trajectory has been notable, with a recent ranking as the second top franchise on Entrepreneur's 2024 Franchise 500 list.
Peter Cancro expressed confidence in the partnership, citing Blackstone's history of nurturing iconic franchise businesses. Blackstone Senior Managing Director Peter Wallace highlighted Jersey Mike's consistent quality and customer loyalty as key growth drivers, expressing excitement over the potential to support the brand's expansion and technological investments.
The deal awaits the satisfaction of certain conditions, including regulatory approvals. Financial advising roles were filled by Guggenheim Securities and Morgan Stanley (NYSE:MS) & Co. LLC for Jersey Mike's, with legal counsel from White & Case LLP. Blackstone was advised by Barclays (LON:BARC) and Bank of America, with legal counsel from Simpson Thacher & Bartlett LLP.
Jersey Mike's, known for its community involvement, recently completed its 14th Annual Month of Giving, having raised over $113 million for local charities since 2011. The company also supports store-level managers in becoming franchise owners through its Coach (NYSE:TPR) Rod Smith Ownership program.
This strategic acquisition by Blackstone, as part of its private equity strategy for individual investors, signifies a continued commitment to the fast-casual industry. The information is based on a press release statement.
In other recent news, Blackstone Inc. has seen several significant developments. Board member Kelly A. Ayotte has resigned following her election as the governor of New Hampshire. This change reduces the size of Blackstone's board from nine to eight members. In terms of acquisitions, Blackstone Real Estate has agreed to a $4 billion all-cash deal to acquire Retail Opportunity Investments (NASDAQ:ROIC) Corp, a company known for owning strip malls across the U.S. The company has also placed a $5.03 billion bid to acquire a minority stake in Rogers Communications (TSX:RCIa)' cellphone infrastructure division.
Blackstone has announced a leadership reshuffle within its Tactical Opportunities division, with Chris James named as the Global Head. The company is also planning to expand its private wealth business into new European markets in the coming year, a move that follows an increase in the firm's global private wealth assets to approximately $250 billion, up from $103 billion in 2020.
TD Cowen has maintained its Hold rating on Blackstone but increased the stock's price target to $149.00. BMO Capital Markets also adjusted its outlook on Blackstone, increasing the price target to $134 from the previous $112 while maintaining a Market Perform rating on the stock. These recent developments underscore Blackstone's active efforts to diversify its portfolio and increase its assets under management.
InvestingPro Insights
Blackstone's acquisition of Jersey Mike's Subs aligns well with the company's strong financial performance and growth trajectory. According to InvestingPro data, Blackstone's revenue growth stands at an impressive 35.11% over the last twelve months, with a quarterly revenue growth of 54.13% in Q3 2024. This robust growth underscores Blackstone's capacity to identify and invest in high-potential businesses like Jersey Mike's.
The deal also reflects Blackstone's strategic focus on profitable ventures. InvestingPro Tips indicate that Blackstone has been profitable over the last twelve months and is expected to remain profitable this year. With a high return of 78.83% over the last year and a strong return of 36.62% over the last three months, Blackstone's investment in Jersey Mike's appears to be a continuation of its successful track record.
Moreover, Blackstone's market position remains strong, with the company trading near its 52-week high. This suggests investor confidence in Blackstone's strategic decisions, including the Jersey Mike's acquisition. The company's ability to maintain dividend payments for 18 consecutive years, as noted in the InvestingPro Tips, further emphasizes its financial stability and potential to support Jersey Mike's growth plans.
For investors seeking more comprehensive insights, InvestingPro offers 13 additional tips for Blackstone, providing a deeper understanding of the company's financial health and market position.
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