Blackstone mulls ABS funding for Jersey Mike's purchase
Blackstone is considering using the asset-backed bond market to help finance its purchase of a majority stake in sandwich chain Jersey Mike's Subs, people familiar with the matter said.
The New York-based private equity giant said on Tuesday that it agreed to buy the New Jersey-based fast-food franchiser in a deal that is expected to close early next year. Financing details were not disclosed.
The people familiar with the deal said that any financing package for the acquisition could include, among other options, expanding the existing ABS programme Jersey Mike's already has in place. Plans for financing the purchase are still under discussion and could change, one of the people said.
Bloomberg first reported on Tuesday that Blackstone was considering tapping the ABS market to fund the deal, which could value Jersey Mike's at US$8bn including debt.
Jersey Mike's completed its first whole business securitization 2019, when it raised US$500m, and two years later raised the same amount selling bonds also backed by franchise fees. S&P and Kroll rated the securities BBB/BBB.
Guggenheim, which arranged both ABS deals for the sub sandwich maker, and Morgan Stanley advised Jersey Mike's on the acquisition. Barclays and Bank of America, both in the top five in the US ABS league table this year, advised Blackstone.
Buyout shops have often used the structured finance market to finance purchases of franchisers. The biggest whole business securitization ever was a US$3.35bn fundraising that helped finance Roark Capital's US$9bn acquisition of Jersey Mike's rival Subway earlier this year.
It is unlikely that any Jersey Mike's ABS transaction would be nearly as large as the Subway deal, the people said. Blackstone declined to comment, and a spokesperson for Jersey Mike's did not respond to a request for comment.