Private equity firm Blackstone (BX) is beefing up its investment in the restaurant industry with a deal to acquire a majority stake in sub-sandwich chain Jersey Mike’s. Blackstone and Jersey Mike’s expect the acquisition to be completed in early 2025 and could value the chain at $8 billion.
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Peter Cancro, founder and CEO of Jersey Mike’s, will continue to lead the company and maintain a significant equity stake after Blackstone’s investment.
Speaking about the investment, Cancro said, “We believe we are still in the early innings of Jersey Mike’s growth story and that Blackstone is the right partner to help us reach even greater heights.”
Why Is Blackstone Interested in Jersey Mike’s?
Blackstone has shown interest recently in expanding its ownership of franchise food chains. That saw it make an equity investment in 7 Brew Coffee in February. Just a couple of months later, the private equity firm reached an agreement to acquire restaurant franchiser Tropical Smoothie Cafe.
These investments and acquisitions come at a time when private equity firms are seeking out franchisers. This saw Roark Capital acquire Subway in 2023 in a deal valued at about $9.55 billion. Subway is a direct rival to Jersey Mike’s and is the larger of the two businesses.
Blackstone has a history of taking businesses and reorganizing operations for financial improvements. It could be that it targeted Jersey Mike’s because it saw the potential for the business to grow. This may see Blackstone push Jersey Mike’s to become a stronger competitor against Subway.
Should You Own Blackstone Stock?
Turning to Wall Street, the analysts’ consensus rating for Blackstone is Moderate Buy based on six Buys, 11 Holds, and one Sell assigned over the past three months. It also has an average price target of $164.12, with a high of $208 and a low of $125. This represents a potential 11.66% downside for BX shares.
