By Abigail Summerville
(Reuters) -RaceTrac agreed to buy sandwich chain Potbelly Corp for approximately $566 million on Wednesday, in a rare move for a convenience store operator to buy out a restaurant brand.
Family-owned RaceTrac, which operates convenience stores under the RaceTrac, RaceWay and Gulf brands, will commence a tender offer to acquire all of the outstanding shares of Potbelly for $17.12 per share, according to a statement.
All of Potbelly’s directors and executive officers have agreed to tender their shares, representing around 11% of Potbelly’s outstanding common stock.
Potbelly shares jumped more than 30% on Wednesday to $17 each after the deal announcement. The transaction marks a 47% premium to the company’s 90-trading-day volume-weighted average price.
Convenience store chains sometimes have franchising agreements with restaurants, but it is rare for them to buy a branded restaurant chain outright, industry experts said.
RaceTrac, headquartered in Atlanta, Georgia, wanted to add a restaurant to its portfolio of convenience stores, and the two companies negotiated the deal outside of a formal auction process, according to sources familiar with the matter.
Private equity firms have been the most active buyers of sandwich chains in recent years. Blackstone acquired Jersey Mike’s for around $8 billion last year and Roark Capital, which also owns Jimmy John’s, bought Subway in 2023 for up to $9.55 billion.
Today’s deal could inspire other restaurants to consider convenience store chains as potential buyers, the sources added.
Potbelly opened its first location in Chicago in 1977 and now operates over 445 locations and franchises more than 105 locations in the U.S.
RaceTrac operates more than 800 RaceTrac and RaceWay locations in 14 states and around 1,200 Gulf locations across the U.S. and Puerto Rico.
The companies highlighted their shared capabilities in real estate, franchising, operations, food innovation and marketing in the deal announcement.
(Reporting by Abigail Summerville in New York; Editing by David French and Aurora Ellis)
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