In an $11.3 billion deal, the owner of Dunkin’ Donuts and Baskin-Robbins agreed to be purchased by private equity-backed Inspire Brands Inc., one of the biggest deals ever in a restaurant industry upended by the pandemic.
The firms said Friday in a statement that Inspire, which owns franchises such as Arby’s and Buffalo Wild Wings, will take Dunkin ‘Brands Group Inc. private at $106.50 a share. That represents a 20% premium over Oct. 23’s closing price, before news of the deal talks sent shares soaring. The price is 6.8 percent higher than the close on Friday.
In a tweet, Paul Brown, co-founder, and chief executive officer of Inspire Brands, said that the brands of Dunkin ‘and Baskin-Robbins are “two of the world’s most recognizable restaurant brands” and will enhance Inspire with its foreign operations, licenses, and 15 million loyalty members.
The deal highlights Dunkin’s growth potential and adds big brands to the portfolio of Inspire. Although the pandemic has changed customer preferences and strained the finances of many restaurants, an investment in Dunkin’ digital operations and growth beyond conventional breakfast fare has allowed its shares to outpace the market as rivals battle this year.
This year, the stock rose 32 percent, including a 12 percent raise after news of the deal talks emerged over the weekend.
For the restaurant industry, and particularly for those establishments focusing on breakfast, the transaction comes at a volatile time, as office closures mean less commuting and less coffee-shop visits. This has been labeled a troubled group by Competitor McDonald’s Corp., while Starbucks Corp. has struggled with revenue declines. Still, on Oct. 29, Dunkin’ posted profit and revenue that beat the expectations of analysts.
Dunkin ‘fared well due to investments in its mobile ordering app-improving contactless payment options — and expansion into a segment of lunch where the business had previously had little presence. Dunkin’s executives said during an earnings call in July that the Canton, Massachusetts-based chain, which dropped the word “Donuts” from its namesake chain about two years ago as it broadened its emphasis, gained market share during the pandemic partly through wide availability of drive-thru and delivery.
In a recent note, KeyBanc analyst Eric Gonzalez said, ‘The market is just beginning to credit Dunkin’ for the capabilities it has placed in a place that has positioned it to achieve sustainable growth. “He said it was interesting to see the involvement of Inspire Brands in a well-run business such as Dunkin, considering the previous focus of the acquirer on” turning around struggling brands.
In 2018, through the merger of Arby’s and Buffalo Wild Wings, Inspire, funded by the Atlanta-based private equity firm Roark Capital, was started. Since acquiring Sonic and Jimmy John’s, the company has said it wants to create a range of restaurant brands that serve customers across multiple markets.
By the end of the year, the Dunkin’ deal is scheduled to close. Bank of America Corp. told Dunkin ‘about the offer, while Inspire was advised by Barclays Plc.
Dunkin, ‘which had $1.4 billion in revenue last year, gives Inspire a portfolio of over 12,500 Dunkin’ and nearly 8,000 Baskin-Robbins restaurants worldwide. During a time of dislocation for the industry, Dunkin ‘has been reshaping its footprint, announcing plans in July to permanently close about 800 U.S. locations as part of a’ real estate portfolio rationalization.’
