RaceTrac Acquires Potbelly for $5.66 Billion, 47% Premium

RaceTrac, a prominent convenience store operator, has agreed to acquire Potbelly, a sandwich chain, for approximately $5.66 billion. This cross-industry acquisition is a rare occurrence in the retail sector. RaceTrac, a family-owned business, operates under the RaceTrac, RaceWay, and Gulf brands. The company has initiated a tender offer to acquire all outstanding shares of Potbelly at $17.12 per share.

All directors and senior management of Potbelly have agreed to sell their shares, which constitute about 11% of the company's issued and outstanding common stock. The acquisition price represents a 47% premium over Potbelly's 90-day volume-weighted average price.

Industry experts note that convenience store operators occasionally enter into franchise agreements with restaurants but rarely acquire restaurant chains outright. RaceTrac, headquartered in Atlanta, Georgia, aims to add a restaurant to its convenience store portfolio. The deal was struck without a formal auction process.

In recent years, private equity firms have been the most active buyers of sandwich chains. The transaction announced on Wednesday may prompt other restaurants to consider convenience store chains as potential buyers.

Potbelly opened its first store in Chicago in 1977 and currently operates over 445 company-owned stores and more than 105 franchised locations across the United States. RaceTrac operates over 800 RaceTrac and RaceWay stores in 14 states and approximately 1,200 Gulf stores in the United States and Puerto Rico.

Both companies highlighted their shared strengths in real estate, franchising, operations, food innovation, and marketing in their joint announcement. This acquisition is expected to create synergies and enhance the overall customer experience by integrating Potbelly's popular sandwich offerings into RaceTrac's convenience stores.