Roark Capital getting close to acquiring sandwich chain Subway

Reuters is reporting that private-equity firm Roark Capital is inching closer to acquiring sandwich chain Subway.

According to Reuters, the over US$9 billion deal hinges on Roark Capital “attaching conditions to some of the windfall the two families that own it will get," said people familiar with the matter.

The conditions are known as an earn-out, that Reuters says defer payment on part of the deal consideration. For the full price of the proposed deal to be paid, Subway’s cashflow “would need to reach certain milestones over a specified period after the deal closes,” according to sources that spoke with Reuters.

In mid-February of this year, it was announced that Subway’s shareholders were exploring a possible sale of the company with J.P. Morgan advising Subway and helping it conduct the sale exploration process.

Founded in 1965 by 17-year-old Fred DeLuca and family friend Peter Buck, Subway has been owned by the founding families since its first restaurant opened as "Pete's Super Submarines" in Bridgeport, Connecticut. The Milford, Connecticut-based company has been revamping its operations and in 2021 launched a menu overhaul and new marketing campaign.

Roark Capital controls Inspire Brands which owns Jimmy John's, Arby’s, Baskin-Robbins, Buffalo Wild Wings, Dunkin’, Rusty Taco and SONIC Drive-In chains.