Panera Bread buys 51% stake in Paradise Bakery

Nation's Restaurant News,  Nov 27, 2006  

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ST. LOUIS -- The 976-unit Panera Bread Co. agreed to pay $21.1 million for 51 percent of Paradise Bakery & Cafe Inc., operator or franchisor of 44 bakery-cafe outlets. Panera is expected to operate Paradise under that name as a separate brand. Paradise, based in Scottsdale, Ariz., owns and operates 24 bakery-cafes, including 17 in the Phoenix market. Its franchisees have 20 locations on the West Coast and in the Southwest and a handful in Indiana and Massachusetts. An additional 14 units are slated to open later this year or next year, according to the chain's website.

The deal is expected to close by year-end or early next year. Securities analyst Robert M. Derrington of Morgan Keegan & Co. in Nashville, Tenn., said Paradise "offers Panera a second strong concept for development in the underpenetrated Southwest." The two brands "overlap operationally and culturally," he added.

Panera has the right to purchase the remaining 49 percent of Paradise's common stock after Jan. 1, 2009, at "a contractually determined value," which was not disclosed. If Panera does not take that option, Paradise's minority owners can buy back the company.

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