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General Atlantic increases share in Joe & The Juice to 90% for $641m

By Marvin Stenersen, Angyan Liu, Douglas Dalén (Stockholm School of Economics), Rhys Meredith, Velizar Zlatev, Ben Jackson, Aditi Singh, Aaryan Upadhyay, Dominic Zhu (University of Bristol)


Photo: Lawless Capture (Unsplash)

 

Overview of the deal


Acquirer: General Atlantic

Target: Joe & The Juice

Implied Equity Value: $641mn valuation in the transaction

Total Transaction Size: Financial terms of the deal were not disclosed

Closed date: Expected Q4, 2023

Target advisor: Citigroup Global Markets (financial), Moalem Weitemeyer and White & Case (legal)

Acquirer advisor: Plesner and Paul, Weiss, Rifkind, Wharton & Garrison LLP (legal)


General Atlantic revealed on November 13, 2023, its strategic move to deepen its partnership with Joe & The Juice, a health-focused coffee shop chain, by acquiring a majority stake. The acquisition involves purchasing the shares held by Valdeo Partners, resulting in Valdeo’s complete exit from their equity participation. This development marks General Atlantic’s deepened involvement building upon their initial minority growth investment in 2016. The addition of Joe & The Juice aligns with the fund’s other ‘lifestyle’ brands in their portfolio like Gympass, BuzzFeed, and European Wax Center.


Joe & The Juice had contemplated an IPO in 2019 before the pandemic but decided to back down. Currently, the chain has about 360 stores globally, a significant rise from 175 in 2016. Their strategy includes a focus on growing digital sales, capitalizing on the US consumers’ consumer preference for digital ordering. The chain has also quadrupled its revenue since 2016 with the support of private equity money. A part of the investment from General Atlantic will be directed towards reducing debt and supporting new store openings in key markets.


“As we make strides into our next chapter, we look forward to bringing Joe & the Juice to more customers globally through our focus on geographic expansion, franchising, and a seamless omni-channel experience.” - Thomas Noroxe, CEO (Joe & the Juice)


Company Details (Acquirer - General Atlantic)


General Atlantic is an American growth equity firm founded in 1980 by Chuck Feeney, the co-founder of travel retailer Duty Free Shoppers. In June 2023, General Atlantic was ranked ninth in Private Equity International’s PEI 300 ranking of the largest private equity firms in the world, with over $77 billion in assets under management and 225 portfolio companies. They specialise in the thematic sectors of Climate, Consumer, Financial Services, Healthcare, Life Sciences, and Technology. Their globally integrated team operates under a single investment platform across 16 locations and boasts a highly diversified portfolio, with over 50% of investments based outside of the United States. They are best known for supporting fast-growing consumer and technology companies, with one notable deal being their stake in ByteDance, the parent company of TikTok.


Founded in 1980, headquartered in New York, United States

CEO: William E. Ford

Number of employees: 496

Assets Under Management: $77 billion (as of December 1, 2023)


Recent Transactions: $355m investment in Butternut Box (October 2023); $30m investment in Quizlet (April 2020); $40m investment in Squarespace (April 2014)


Company Details (Target - Joe & the Juice)


Joe & the Juice is a Danish chain of juice bars, based in Copenhagen, established in 2002. Known for their contemporary setting, they offer a selection of freshly pressed juices, smoothies, and light food options. They have a global presence with 310 stores in 17 countries in Europe, USA, Asia, and Oceania, and maintain a focus on health-conscious choices. In addition, the company sells coffee capsules, T-shirts, thermo bottles, gift cards, brew bottles, ceramic drippers, filter papers, etc, through their online webshop.


Founded in 2002, headquartered in Copenhagen, Denmark

CEO: Thomas Nørøxe

Number of employees: 2900

2022 Revenue: $247.6m


Projections and Assumptions


Short-term consequences


General Atlantic will take a controlling share of Joe & The Juice upon the completion of the transaction, increasing their ownership share from 30% to 90%. Existing shareholders including Swedish private equity firm Valedo Partners will exit the company in full. This deal highlights the continued interest from General Atlantic in the High-Street food chains segment despite the mixed results from previous investments such as Prezzo and Côte Restaurants. Being partnered with Joe & the Juice since 2016 as strategic minority investors, General Atlantic has helped the company grow revenue 4x and doubled the number of storefronts during that period.


The transaction reflects General Atlantic's further commitment to the Copenhagen-based juice and sandwich chain citing its digital traction, the global receptivity of the brand and Joe & the Juice capitalising on trends such as healthy living and convenience as reasons for further potential growth and rollout of its storefronts.

General Atlantic's investment aims to help Joe & the Juice pay down its existing debt load by opting for unlevered store rollouts and support the company's effort to expand its footprint in key markets, highlighting the US as a key market for further growth as well as hinting on expansion in international markets such as UK, Europe and the Middle East, where it owns 23 franchised stores currently.


Long-term Upsides


General Atlantic's controlling stake in Joe & the Juice signals an amplified commitment towards the company's expansion strategies. With a valuation of about $600 million and plans to increase its stake to as much as 90%, this move provides substantial financial backing for Joe & the Juice to expand into new international markets. The partnership facilitates Joe & the Juice's potential to penetrate markets such as the US, Europe, and the Middle East. With a rapid growth trajectory and plans to expand beyond its existing 360 stores globally, the infusion of capital from General Atlantic could significantly accelerate this expansion, reinforcing the company's market presence.


Further, the infusion of funds will not only help reduce the company's debt, but also facilitate Joe & the Juice's focus on value-creation initiatives. This might involve strengthening its digital distribution channels, investing in R&D for innovative products, and enhancing customer experience through an omnichannel approach. Additionally, with increased resources, the company aims to drive both company-owned and franchised unit growth, further solidifying its market position.


Acknowledging Joe & the Juice's increased focus on digital business, the additional investment could support further innovation in digital strategies. This might include bolstering online sales channels and implementing tech-driven approaches to enhance customer engagement, reflecting the company's commitment to evolving consumer preferences.


Through General Atlantic's extensive experience in scaling growth companies, Joe & the Juice can benefit from strategic insights, operational expertise, and a global network. This partnership may provide invaluable guidance to Joe & the Juice's management, potentially aiding in strategic decision-making and market positioning for sustained growth.


Risks and Uncertainties


As with any retail business capitalising on a powerful trend, the biggest potential risk is the stagnation of its brand value. Currently, Joe & the Juice draws customers with its distinct menu and ‘edgy’ appeal, with entries such as the ‘Tunacado’, that set it apart from rivals. With a general societal shift towards more sustainable and higher-quality diets, the expansion will likely prove popular with a focus on organic and vegan offerings. However, a failure to innovate and sustain the brand’s appeal is also a likelihood due to relatively high prices compared to the competitors and constantly evolving consumer preferences at the higher end of the fast-food segment. The erosion of value over time from the consumer's point of view will make it hard to grow at scale.


Another key consideration is managing costs. Although inflationary pressures on food and energy prices have started to stabilize across developed economies, wage pressures remain, especially at the entry-level where the majority of retail employees stand. Moreover, much of the current strategy relies on leasing spaces for stores in upmarket areas of major cities and this will not help control costs as rents will continue to be relatively resilient in these areas. Focus on the growth of its digital business in existing markets should help the firm grow profit margins which should then offset some of the expansion costs in new markets. The UK business, which is home to the most outlets after Denmark, saw strong revenue growth in 2022, but ultimately still a pre-tax loss of £5.1 million. Results for PE-backed restaurant and food retail outfits have been mixed and many have had to undergo restructuring after a lacklustre performance in recent times. Joe & the Juice’s success will largely depend on its ability to sustain distinction from competitors and build a loyal customer following, all while keeping a lid on costs as it expands.


“Our increased investment in Joe & the Juice is a testament to the global receptivity of the brand. Joe & the Juice reflects broader secular trends of convenience and healthy living, while also possessing a brand which resonates with customers in multiple markets. We see further runway to double down on our commitment and unlock the business’ full potential,” added Melis Kahya Akar, Managing Director and Head of Consumer for EMEA at General Atlantic


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