_{DEAL OF THE MONTH}

Sandwiches Get the Private Equity Treatment

Those of us in America are recovering from our food coma’s on Thanksgiving, but that still won’t deter me from writing about food today. So put your extra loose Thanksgiving pants back on and strap in, it’s time to talk about one of the biggest deals in food: Blackstone’s $8 billion acquisition of Jersey Mike’s Subs.

Jersey Mike’s, with over 3,000 locations in operation and development, has become a sub-slinging powerhouse, generating $3.3 billion in sales annually. But beyond the numbers, the story of its founder, Peter Cancro, is just as impressive.

Cancro started working at the original Mike’s Subs at just 14 years old. By 17, he purchased the shop with a $125,000 loan, and by 26, he began franchising. Fast forward to today, and Cancro has sold a majority stake in his company for a cool $8 billion. Talk about having something to be thankful for.

Now you might be asking yourself, how big can sandwiches really be. At $10 per sub, you’d need to sell a lot of sandwiches to hit an $8 billion valuation. But let’s not forget that Roark Capital acquired Subway for $9.6 billion back in September 2023 (check out our inaugural edition of Buysiders).

Here’s where it gets interesting: Subway does nearly 10x the revenue of Jersey Mike’s, but the price difference was only $1.5 billion. This suggests Jersey Mike’s got a hefty valuation, but the financial engineers over at Blackstone know what they’re doing.

Jersey Mike’s average sales per store is roughly double that of Subway, which helps justify the premium. Plus, its growth metrics blow Subway out of the water: 25% sales growth versus 7.3%, and 12% unit growth compared to Subway’s 2%.

In case you haven’t noticed, we’re huge food fans here at Buysiders. We hope that Jersey Mike’s can stay true to itself under Blackstone’s ownership, and, more importantly, I hope I don’t see an “Acquisition Debt Amortization” line on my next Jersey Mike’s receipt.

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Where Sophisticated Investors Access Private Markets

10 East, led by Michael Leffell, allows qualified individuals to invest alongside private market veterans in vetted deals across private credit, real estate, niche venture/private equity, and other one-off investments that aren’t typically available through traditional channels.   

Benefits of 10 East membership include:    

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_{NEWS ROUNDUP}

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_{STRATEGIC DEAL OF THE MONTH}

Peabody Energy Says G’Day to Australia (Again)

Coal is a notoriously out of favor sector (I probably comment on that once a quarter) but man do some of these companies have unbelievable amounts of cash for such a shunned industry.

Coming to you all the way from down under (and St. Louis) - Peabody Energy announced the acquisition of Anglo American’s coal assets in Australia for $2.3 billion.

Let’s set the stage. Back in May 2024, BHP made a bid to acquire rival Anglo American (we covered it, of course). The offer didn’t go over well with Anglo’s shareholders, who saw its coal business as a value drag.

In response, Anglo initiated a strategic review and decided to sell its Australian coal operations. Fast forward, and Peabody is now the winning bidder, bolstering its Australian portfolio in a deal that makes strategic sense.

Without going too much into the details, there are two kinds of coal: 1) metallurgical and 2) thermal.

Metallurgical is the kind that is used to make steel and thermal is the kind that turns your lights on and powers your Tesla. Investors much prefer metallurgical coal to thermal coal for ESG reasons, so any company that can increase metallurgical production will trade better.

Following the transaction, Peabody will be the third largest metallurgical coal producer globally, with a significant amount of growth coming from the acquired assets from AngloAmerican. 2026 EBITDA expected to grow ~2x and will be 92% metallurgical coal (compared to 84% today).

Now, to the deal details:

Consideration: $1.7 billion in cash at closing, $625 million in deferred payments, and up to $1 billion in contingent payments tied to coal pricing and the restart of the fire-stricken operation.

Financing: Peabody secured a $2.1 billion bridge loan from private credit funds, including Jefferies and KKR. The loan, with a SOFR + 8% rate, will be replaced with high-yield notes or secured term loans.

Despite potential synergies exceeding $100 million, Peabody shares dropped 15% post-announcement. Why? Investors love coal stocks for dividends and capital returns, not acquisition spending.

On the flip side, Anglo shares jumped ~9%, as the company is now free from its coal baggage and set to trade more like its non-coal mining peers.

Hopefully you guys find these deals as interesting as I do. Everyone hears about the huge PE deals and the big tech deals, so I like bringing some multi-billion dollar deals that you may not have heard of to your inboxes.

And with the amount of coal M&A this year, I may need to create a "Rocks Deal of the Year" category for the Buysiders year-end awards.

_{INT’L DEAL OF THE MONTH}

Amcor Packs Up Berry for ~$8 Billion

With the holidays around the corner, packaging is on everyone's mind—or at least it should be if you're wrapping gifts. Amcor specializes in all kinds of packaging, so let’s dive into their latest acquisition.

Amcor has agreed to acquire Berry Global for ~$8.4 billion in an all stock deal in one of the largest M&A transactions of the year. The deal is struck at a fixed exchange ratio of 7.25x, which would result in Berry shareholders owning ~37% of the pro forma company.

The pro forma company will have ~$24 billion in revenue and ~$4.3 billion in adjusted EBITDA, with synergies expected to add ~$650 million annually by the end of year three.

Notably, 40% of synergies are expected by year one and 80% by year two, along with $280 million in one-time cash benefits from working capital efficiencies.

Amcor and Berry Global are both relatively flat on the news. Berry has traded down ~28% in the past 3 months, which implies that Amcor is jumping in at a good time to acquire Berry at a depressed valuation.

While we’re no packaging experts, the timing and strategic rationale for this deal seem solid. Amcor has a track record, including a successful 2018 acquisition, so let’s see if they can deliver the same results here. Only time will tell if this deal ends up in a neatly wrapped box or the recycling bin.