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Sandwich Chain Subway to Sell Itself For $9.55bn to Roark Capital: Sources


LAHORE MIRROR — Subway would sell itself to private equity Roark Capital for $9.55 billion after agreeing to attach conditions to some of the windfall the two families that own it will get, sources said, ending a long-drawn auction that saw several competing bids.

These conditions, known as an earn-out, defer payment on part of the deal consideration, the sources familiar with the matter said.

For the full price to be paid, Subway’s cash flow would need to reach certain milestones over a specified period after the deal closes, they said.

The deal was valued at $8.95 billion, excluding the earn-out target, sources said.

Roark beat out a late challenge from a rival bidding group led by TDR Capital and Sycamore Partners, which submitted a final bid of $8.75 billion or $8.25 billion excluding an earn-out, according to people familiar with the matter.

The arrangement helped bridge a gap in the valuation expectations between Roark Capital and the DeLuca and Buck families that own Subway, according to the sources.