Bidders emerge for sandwich shop Subway

A handful of parties, including Goldman Sachs Asset Management, submitted indicative offers last week to acquire Subway, Sky News reports.

Why it matters: The home of the $5 footlong could be valued at as much as $10 billion, but would-be buyers will face a difficult operating environment.

Catch up fast: Subway confirmed in mid-February that it is exploring a sale, after Axios reported buyers were circling.

Details: PE firms TPG, Bain Capital and TDR Capital — which owns stakes in supermarket chain Asda and convenience store operator EG Group — were also named in the report as having "lodged" their interest.

Meanwhile, PE firm TSG Consumer Partners was reported by Sky News to be monitoring the situation rather than submitting a bid at this stage.

The intrigue: Financial firms rather than strategics have emerged as leading contenders for the sandwich shop, in not only a difficult operating environment but also a difficult financing one.

• But industry sources tell Axios that deep-pocketed PE firms are more willing to front most of the financing to get deals done for the time being.
• They will then extract large dividends when the debt financing markets reopen.

TSG Consumer, Goldman Sachs, Bain, TDR and TPG declined to comment. Subway did not respond to a request for comment.