Dunkin’ Brands, the parent company of the Dunkin’ and Baskin Robbins chains, is in talks to sell itself to a private equity-backed company, Inspire Brands.
The deal being discussed, which could be announced as soon as Monday, would take Dunkin’ Brands private at a price of $106.50 a share, said two people with knowledge of the negotiations, who spoke on condition of anonymity because the talks are confidential. The price would be a 20 percent premium over the company’s closing price on Friday, and implies a company valuation of about $8.8 billion. Dunkin’s share price has more than doubled since March, as investors took heed of its success in building up its app and drive-through services. Its shares are up about 18 percent from a year ago.
The transaction would add Dunkin’ Brands to Inspire Brands’ portfolio, which includes Arby’s, Buffalo Wild Wings, Sonic and Jimmy John’s. Inspire is backed by the private equity firm Roark Capital.
In a statement on Sunday, Dunkin’ Brands said: “Dunkin’ Brands confirms that it has held preliminary discussions to be acquired by Inspire Brands. There is no certainty that any agreement will be reached. Neither group will comment further unless and until a transaction is agreed.”
A spokesman for Inspire Brands had no comment.
Dunkin’ has said that as stay-at-home orders have shifted working patterns, customers have been coming to its stores later in the day than they used to and spending more on newer and more expensive items like espresso and other specialty beverages. Dunkin’ already brings in more than half its revenue through drinks, and it dropped “Donut” from its name last year as it seeks to shift its emphasis to coffee and take on Starbucks more directly.
“While Dunkin’ may not have been thought of by investors as a beneficiary of the current environment, these results make the case that it has been,” analysts at Morgan Stanley wrote in a research note this summer.
During the pandemic, Dunkin’ has been bolstered by its drive-throughs and online ordering systems, allowing its restaurants to continue to serve customers while smaller, independent chains have faltered. It took an initial hit in the pandemic, reporting a 20 percent drop in sales in the second quarter and announcing plans to close about 800 of its least-profitable stores. But business since then has been improving.
Dunkin’ Brands, whose 21,000 outlets are all franchised, reported revenue last year of $1.4 billion and a profit of more than $240 million.
The chain has been private before. It was owned by a consortium of private equity firms, led by Bain Capital, Carlyle Group and Thomas H. Lee Partners, who acquired Dunkin’ Donuts from Pernod Ricard in a $2.4 billion deal in 2005. The firms took it public six years later.