The Blackstone Group plans to cash in on a portion of its Jersey Mike's Subs holdings. The slow fill of IPO information continued with a S-1A filing on July 20. Blackstone filed for the IPO just eighteen months after acquiring Jersey Mike's.
On January 16, 2025, we were acquired by the Buyer (as defined herein) as a new portfolio investment for a purchase price of $6.3 billion.
A number of blanks remain in the filing but a few noteworthy bits are below:
First, Jersey Mike's purchased a private jet and gave it to the company's founder, the man who sold that majority stake to Blackstone in January 2025.
....$41 million in 2024 for cash outlays associated with the purchase of an aircraft on behalf of our Founder that was transferred to our Founder in connection with the Sponsor Acquisition
Second, the company paid "member distributions" of $30 million and $468 million (with the latter amount debt financed). Debt financed dividends to sponsor have been called a "liquidity recapitalization." Apparently that term is no longer in use.
Third, Jersey Mike's Subs will be on the hook for $2 billion to pre-IPO owners:
Prior to the completion of this offering, Jersey Mike’s Subs Inc. will enter into a tax receivable agreement with certain of the pre-IPO owners that provides for the payment by Jersey Mike’s Subs Inc. to such pre-IPO owners of 90% of certain tax benefits, if any, that Jersey Mike’s Subs Inc. actually realizes, or is deemed to realize (calculated using certain assumptions), as a result of (i) Jersey Mike’s Subs Inc.’s allocable share of existing tax basis in certain Jersey Mike’s Holdings’ assets acquired in this offering, (ii) increases in Jersey Mike’s Subs Inc.’s allocable share of existing tax basis and tax basis adjustments to certain tangible and intangible assets of Jersey Mike’s Holdings as a result of sales or exchanges of Common Units (including Common Units issued upon conversion of vested Incentive Units), (iii) Jersey Mike’s Subs Inc.’s utilization of certain tax attributes (including any existing tax basis) of certain entities that are taxable as corporations for U.S. federal income tax purposes through which the Pre-IPO Stockholders hold their interests in Jersey Mike’s Holdings prior to the Offering Transactions (the “Blocker Companies”), which Jersey Mike’s Subs Inc. acquires in connection with this offering as described under “Organizational Structure—Blocker Transfers,” and (iv) certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This payment obligation is an obligation of Jersey Mike’s Subs Inc. and not of Jersey Mike’s Holdings. The term of the tax receivable agreement will continue until all such tax benefits have been utilized or expired...
@$23.00 per share of Class A common stock (the midpoint of the estimated price range set forth on the cover page of this prospectus), we estimate that we would, as a result of the Reorganization Transactions, the Offering Transactions and such hypothetical exchange, record a deferred tax asset of approximately $503 million and that the aggregate non-current liability we would record based on our estimate of the aggregate amount that Jersey Mike’s Subs Inc. would pay under the tax receivable agreement is approximately $2,084 million.
Fourth, the private equity stake held by BX will remain under its current partnership structure as Blackstone will retain 75% ownership in Jersey Mike's.
Our post-offering organizational structure, as described above, is commonly referred to as an umbrella partnership-C-corporation (“UP-C”) structure. This organizational structure will allow the Continuing Unitholders to retain their equity ownership in Jersey Mike’s Holdings, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of Common Units. Investors in this offering and the Pre-IPO Stockholders will, by contrast, hold their equity ownership in Jersey Mike’s Subs Inc., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of Class A common stock. We believe that the Continuing Unitholders generally find it advantageous to continue to hold their equity interests in an entity that is not taxable as a corporation for U.S. federal income tax purposes.
Fifth, our neighbors across the pond will have a chance to buy-in to the IPO.
Sixth, Blackstone will steer some of the IPO business to its securities affiliate.
...certain affiliates of Blackstone Securities Partners L.P., an underwriter in this offering, (i) own in excess of 10% of our issued and outstanding common stock and (ii) will receive proceeds from the sale of shares of Class A common stock in this offering by the selling stockholders and will receive at least 5% of the net proceeds of this offering, Blackstone Securities Partners L.P. is deemed to have a “conflict of interest” under RuleIt gives real meaning to my pet term "private equity underwriter," abbreviated as PEU.
Seventh, the company's trade name comprises $5.7 billion of its current $8.2 billion in assets. Stockholder's equity is $5.8 billion, roughly the same amount as its trade name.
Eighth, the law firm advising Jersey Mike's has partners with Blackstone investments.
An investment vehicle comprised of selected partners of Simpson Thacher & Bartlett LLP, members of their families, related persons, and others owns an interest representing less than 1% of the capital commitments of certain investment funds affiliated with Blackstone.
Should one wish to participate in Jersey Mike's IPO please consider taking a small stake, similar to the micro-bite Blackstone co-founder Stephen Schwartzman took of a Jersey Mike's sub in his PEU promotional video.
Everything seems to be going Stephen's Way.
