Shares in sandwich maker Potbelly (PBPB) swelled by over 30% today after it agreed to be bought by privately-owned convenience store chain RaceTrac for $566 million.
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Store Goals
Potbelly, founded in Chicago in 1977 and known for its sandwiches, salads and shakes, has 445 restaurants, either company or franchise-owned across the U.S. It has just over 5,000 staff.
It hopes the deal, which is expected to close in the fourth quarter of this year, will help it meet its long-term goal of reaching 2,000 locations.
“With RaceTrac’s resources, we will unlock new opportunity for this incredible brand while staying true to the neighborhood sandwich shop experience that makes Potbelly special,” Potbelly CEO Bob Wright said.
Its shares jumped 32% to $16.50 in early trading, continuing a successful year to date – see above.
Long History
Headquartered in Atlanta, RaceTrac operates more than 800 convenience stores across 14 states, offering customers fuel, freshly-brewed coffee, and food and beverages. The family-owned company was founded in 1934 and employs more than 10,000 staff.
“Our companies, combined, have spent over 130 years delighting guests by providing them with welcoming smiles and a place to enjoy life’s everyday moments. We are proud of Potbelly’s legacy as a beloved neighborhood sandwich shop and are excited to expand our family of convenience-driven brands,” added Natalie Morhous, CEO and Chairman of the Board at RaceTrac.
Despite concerns over economic strength and consumer confidence, Potbelly has continued to beef up sales. It recently reported that Q2 total revenues had surged by 3.4% to $123.7 million compared to $119.7 million. Same-store sales climbed 3.2%.
Adjusted earnings increased 13.0% to $9.6 million compared to $8.5 million.
The North America Sandwich Market is growing at a current annual growth rate of just over 5% as people look for more convenient, healthier and quicker food options.
Is PBPB a Good Stock to Buy Now?
On TipRanks, PBPB has a Strong Buy consensus based on 3 Buy and 1 Hold ratings. Its consensus price target is $16.50, implying a 2.97% downside.
