Pret A Manger partners with Bridgepoint to accelerate its global business

Under the terms of the transaction, the founders and management, including Sinclair Beecham and Julian Metcalfe, will make a significant re-investment in the business. McDonald's, which acquired a 33% share in Pret in 2001, will no longer be part of the business.

Founded in 1986, Pret A Manger has 200 shops (175 in the UK, 14 in the US, 11 in Hong Kong), employs almost 4,000 people and had sales in 2007 of £223 million (£194 million in 2006).

Pret A Manger operates principally in the £4.3 billion UK High Street food services market in which the food-focused branded specialist has delivered growth rates of c10% p.a.. Unlike its branded competitors, the company offers handmade, ethically-sourced food, with all sandwiches and wraps being freshly prepared daily in-store using natural, preservative-free ingredients. Pret shuns 'sell by' dates on its fresh sandwiches and salads, preferring instead to offer food to charity at the end of each day rather than keep it over. Bridgepoint's investment rationale focuses on a number of factors in support of the future development of the business:

• The company, with its cohesive brand, unique culture and strong product offer, operates in a growth market trending towards the Pret-style offer.
• Significant roll-out potential: Pret expects to open at least 30 new shops in 2008, including seven in New York. Future roll-out will target London and the South East, UK regions and the US. The company aims to expand its estate by c.15% in terms of unit numbers per year.
• The opportunity to transform Pret A Manger from a domestic to an international business through controlled expansion of its already profitable but small US presence.
• Strong like-for-like sales growth track record.

Julian Metcalfe of Pret A Manger said: "This is an exciting time for all of us at Pret. Bridgepoint shares our vision, understands our culture and will support our roll-out plan globally, while maintaining everything that makes Pret work for our customers and staff."

Commenting on the acquisition, Guy Weldon, a partner at Bridgepoint, said: "Pret A Manger is a unique business with many USPs that position it well to capitalise on food and consumer lifestyle changes driven by the trend for premium healthy eating. We look forward to working with the management team led by Clive Schlee and Larry Billett to ensure that the spirit of the Pret culture, which has served the company so well, continues as it enters this new stage in its development."

Completion of the transaction is subject to normal regulatory clearances. Debt for the transaction has been underwritten by Rabobank. Advisers involved in the transaction include: for Bridgepoint - Goldman Sachs (corporate finance and minority investor alongside Bridgepoint), OC&C (market due diligence), Travers Smith (legal), KPMG (financial and tax); for Pret A Manger - Rothschild (corporate finance), Macfarlanes (legal); for management - SJ Berwin (legal); for McDonald's - Reed Smith Richards Butler (legal).