Subway restaurants Thursday said it has entered into an agreement to sell to private-equity firm Roark Capital Group, moving the franchisor into new ownership for the first time since its founding 58 years ago.
Subway, which has headquarters in both Milford, Conn., and Miami, said, “The transaction is a major milestone in Subway’s multi-year transformation journey, combining Subway’s global presence and brand strength with Roark’s deep expertise in restaurant and franchise business models.”
Price of the deal was not disclosed, but the Wall Street Journal reported earlier that it was about $9.6 billion and other sources has said it includes an earn-out provision. The deal is subject to regulatory and other conditions.
Roark, based in Atlanta, has $37 billion in assets. It has invested in a number of franchised restaurant brands. Its portfolio includes Inspire Brands (which owns and franchises Arby’s, Baskin-Robbins, Buffalo Wild Wings, Dunkin’, Jimmy Johns and Sonic Drive-In) and Focus Brands (which owns and franchises Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s Deli, Moe’s Southwest Grill and Schlotzsky’s) as well as Carl’s Jr. and Hardee’s, Miller's Ale House, and the franchisor of Seattle's Best Coffee.
“This transaction reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees around the world,” said John Chidsey, CEO of Subway, in a statement. “Subway has a bright future with Roark, and we are committed to continuing to focus on a win-win-win approach for our franchisees, our guests and our employees.”
Subway was founded by Fred DeLuca and financed by Peter Buck in 1965 as Pete's Super Submarines in Bridgeport, Conn. It was renamed Subway in 1972, and a franchise operation began in 1974 with a second restaurant in Wallingford, Conn. Both of the founders have died.
Subway had about 20,810 U.S. locations last year, and about 37,000 restaurants globally.
J.P. Morgan is serving as financial adviser and Sullivan & Cromwell LLP is serving as legal counsel to Subway. Timing is subject to regulatory approvals and customary closing conditions.
Contact Ron Ruggless at [email protected]
Follow him on X: @RonRuggless