Private fairness group Inspire Brands to shop for Dunkin’ in $11.3 billion deal


The owner of Dunkin’ and Baskin-Robbins agreed to be acquired by private equity-backed Inspire Brands Inc. in a $11.3 billion deal, one of the vital largest transactions ever in a restaurant industry that’s being upended by the pandemic.

Inspire, which owns chains such as Arby’s and Buffalo Wild Wings, will take Dunkin’ Brands Group Inc. private at $106.50 a share, the companies said Friday in a remark. That represents a 20% premium over the closing price of Oct. 23, before reports of the deal talks sent shares soaring. The price is 6.8% higher than Friday’s near.

Paul Brown, co-founder and chief executive officer of Inspire Brands, said in a remark that the Dunkin’ and Baskin-Robbins’ brands are “two of the most iconic restaurant brands on the planet” and will toughen Inspire with their international operations, licenses and 15 million loyalty members.

The deal underscores the Dunkin’s growth prospects and adds major brands to Inspire’s portfolio. While the pandemic has upended consumer habits and strained many restaurants’ finances, an investment in digital operations at Dunkin’ and expansion beyond traditional breakfast fare has helped its shares outpace the market this year as rivals struggle.

The inventory climbed 32% this year, including a gain of 12% since news of the deal talks emerged over the weekend.

Fewer Commuters

The transaction comes at a volatile time for the restaurant industry, and especially for those establishments focused on breakfast, as office closures intent less commuting and fewer coffee-shop visits. Rival McDonald’s Corp. has called this a troubled category, while Starbucks Corp. has struggled with sales declines. Still, Dunkin’ reported profit and sales that whip analysts’ estimates on Oct. 29.

“This team’s grit and determination has enabled us to deliver outsized performance,” Dave Hoffmann, chief executive officer of Dunkin’, said in the remark announcing the deal. “All over the global pandemic, we have stood tall.”

Dunkin’ fared timely because of to investments in its mobile ordering app — enhancing contactless buying options — and expansion in a lunch category where the company had prior to now had little presence. The Canton, Massachusetts-based chain, which dropped the word “Donuts” from its namesake chain approximately two years ago as it broadened its focus, has gained market share right through the pandemic in part through wide availability of drive-thru and delivery, Dunkin’ executives said right through an earnings call in July.

“The market is just beginning to credit Dunkin’ for the capabilities it has put in place that have positioned it to reach sustainable growth,” KeyBanc analyst Eric Gonzalez said in a recent note. He said it used to be surprising to see Inspire Brands’ interest in a well-run company like Dunkin’ provided the acquirer’s past focus on “turning around troubled brands.”

Building a Collection

Inspire, backed by the Atlanta-based private fairness firm Roark Capital, used to be started in 2018 through the merger of Arby’s and Buffalo Wild Wings. The company, which has since acquired Sonic and Jimmy John’s, has said it wants to build a collection of restaurant brands serving customers across different markets.

The Dunkin’ transaction is expected to shut by the end of the year. Bank of The united states Corp. advised Dunkin’ on the deal, while Barclays Plc advised Inspire.

Dunkin’, which had sales final year of $1.4 billion, gives Inspire a portfolio of more than 12,500 Dunkin’ and nearly 8,000 Baskin-Robbins restaurants world wide. Dunkin’ has been reshaping its footprint right through a period of dislocation for the industry, announcing plans in July to shut approximately 800 U.S. locations permanently as a part of a “real estate portfolio rationalization.”

The Inspire transaction comes approximately nine years after Dunkin’ went public. The company used to be sold in 2006 by Pernod Ricard to a group of buyers including Bain Capital, the Carlyle Group and Thomas H. Lee Partners for $2.4 billion.

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