New York - 20 March, 2006 -

Quiznos, a privately held U.S. sandwich chain, said on Monday that JPMorgan Partners has agreed to invest in the business, as the company opted to sell a portion of itself rather than the entire company. Terms of the deal were undisclosed, with Quiznos saying only that JPMorgan Partners, the private equity arm of investment bank J.P. Morgan Chase & Co. (NYSE:JPM - news), will become a "significant ownership partner." Quiznos hired investment bank Goldman Sachs & Co. (NYSE:GS - news) late last year to explore its options, including the possible sale of the entire company, according to sources familiar with the matter. The move came amid heated interest from cash-rich private equity firms in the quick service restaurant industry. The auction for Quiznos began not long after coffee chain Dunkin' Brands sold to three private equity firms for $2.43 billion, or more than 11 times the company's cash flow - a large multiple by private equity standards. Private equity firms are attracted to the cash flow, simple business model and real estate value within the quick service restaurant industry. Several major buyout firms -- Blackstone Group and Thomas H. Lee Partners among them -- took a close look at buying Quiznos, but passed on concerns of its price tag, sources close to the matter have said. It is unclear what caused Quiznos to agree to an investment stake instead of a buyout. Quiznos fielded an initial round of bids in January, with private equity firms Madison Dearborn Partners LLC and Apollo Management LP pursuing bids, one source said. Quiznos, which one analyst estimates as having more than $1 billion in annual sales, could not be immediately reached for comment on the price of Monday's deal. Quiznos, which sells toasted subs, soups and salads, competes against larger sandwich chain Subway and other fast-food restaurants. The company started as a single restaurant in Denver in 1981 and has expanded to more than 4,500 locations throughout the US and in fifteen foreign countries worldwide. JPMorgan Partners has made several investments in the food industry, including Pinnacle Foods, a stable of brands that includes Duncan Hines cake mixes, Aunt Jemima pancakes and Swanson dinners.

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