Roark Capital Leads $9.6B Bid for Sandwich Chain Subway

Private equity firm Roark Capital Group has reportedly emerged as the lead bidder, at approximately $9.6 billion, for Subway restaurants, according to a report in the Wall Street Journal.

Subway, which is based in both Miami and Milford, CT, has been considering a sale of its business since February. This proposed takeover comes at a time when private equity firms TDR Capital and Sycamore Partners are both said to be interested in buying the sandwich store.

Earlier this month reports surfaced that private equity firms TDR Capital and Sycamore Partners were in discussions to partner in the acquisition, but Roark Capital has now assumed the lead. According to the WSJ, the agreement might be formally revealed as soon as this week.

Roark Capital specializes in investments in the franchised consumer and business services industries. Through their stake in Inspire Brands, their portfolio now includes well-known brands such as Arby’s, Buffalo Wild Wings, Baskin-Robbins, and Dunkin’.

A multitude of issues have delayed the Subway sale, most notably its US slump, which has seen 6,000 locations shut down since 2015, including more than 500 last year.

This drop has made valuing the company difficult, and a number of buyers are concerned about its growth potential. Furthermore, rising interest rates made valuation difficult, and a dearth of strategic purchasers who could have pushed up the price also slowed the process.

Subway was launched in 1965 by Fred DeLuca and Peter Buck as a single location called “Pete’s Super Submarines” in Bridgeport, CT.