Dunkin’ Brands Says It’s in Talks to Be Acquired by Inspire
(Bloomberg) - Dunkin 'Brands Group, Inc., parent company of coffee and donut chain Dunkin' and Baskin-Robbins, said it was in talks to be acquired by private equity-backed Inspire Brands.
The New York Times previously covered the talks, saying Inspire would take Dunkin private for $ 106.50 per share, citing two people with knowledge of the negotiations who were not identified. The $ 8.8 billion deal could be announced as early as Monday, the newspaper added. The price is a 20% premium over Friday's closing price when the company had a market cap of $ 7.3 billion.
"Dunkin 'Brands confirms it has had preliminary talks with Inspire Brands," said Karen Raskopf, a spokeswoman for Dunkin, in a statement, declining to offer further details and warning that there is no certainty that an agreement will be reached can be.
Dunkin 'Brands shares have more than doubled since March as investors were optimistic that the mobile order app and loyalty program increased sales during the pandemic. Based in Canton, Massachusetts, the company removed the word "donuts" from its name in 2018, indicating that it has increased its focus on beverages. The stock traded at 34x earnings, which is below the median multiple of 37 for the industry, according to Bloomberg News.
The number of coffee shops in the US is shrinking for the first time in nine years as sales plummet and Covid-19 forces the industry to rethink its business. This has Dunkin and other coffee chains like Starbucks Corp. and even McDonald's Corp. helped gain a foothold at the expense of independent outlets, but keeping all stores up and running is not enough.
Say goodbye to your local coffee shop at America's Cafe Shakeup
The US will have 25,307 branches specializing in coffee or tea by the end of 2020, which, according to estimates by research company Euromonitor International, represents a decline of 7.3% compared to the previous year. Annual sales are expected to decrease 12% to $ 24.7 billion.
Dunkin announced in July that around 800 US locations are expected to be closed permanently this year as part of a "rationalization of the real estate portfolio". Similar store sales improved in July, Dunkin said, but they remain in the "low single digits" for stores of both key brands at this point.
Inspire Brands, the owners of Buffalo Wild Wings and Jimmy Johns, is backed by Atlanta-based private equity firm Roark Capital. In April, Roark invested $ 200 million in Cheesecake Factory Inc.
In 2005, Pernod Ricard sold Dunkin 'Brands to a group of buyers including Bain Capital, the Carlyle Group and Thomas H. Lee Partners for $ 2.4 billion. It was floated on the stock exchange in 2011 as part of an IPO.
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