Buyout houses ready for bite of Pret a Manger

Advent International, Bridgepoint and Morgan Stanley are all reported to be preparing bids for UK sandwich shop chain Pret a Manger. However, the £400m-plus price tag on the asset is unlikely to be realistic, owing not only to market wobbles but also to a lack of real international expansion opportunity, a source close to the deal has revealed to unquote". "It has not taken off (in New York) as expected. Outside the UK, a boxed sandwich equals 'not fresh'," the source said. The three remaining bidders - Lion Capital and Iceland's FL Group are reported to have dropped out - are likely to pay well below the asking price, meaning the vendors could pull the sale altogether. The founder-owners may re-invest sale proceeds back into the business in an effort to woo potential buyers.

Pret was established in 1986 and now has around 150 stores, mainly in the UK, but also in New York, Hong Kong and Singapore. The company turns over £150m per annum and reported operating earnings of £30m in the year to September 2007. Its self-proclaimed aim for 9% profit has yet to be achieved. Fast-food giant McDonald's owns a third of Pret, which it would divest on completion of a sale.

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