Dunkin’ confirms sale of itself to Inspire Brands

By:
on Oct 31, 2020
Updated: Jun 1, 2022
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  • Dunkin' Brands agreed to sell itself to Inspire Brands on Friday.
  • Inspire will pay Dunkin' shareholders $106.50 per share.
  • Dunkin' investors are getting a 30% premium versus a 30-day average.

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Dunkin’ Brands Group Inc. (NASDAQ: DNKN), the parent company of coffee chain Dunkin’ and ice cream chain Baskin-Robbins confirmed Friday it reached an agreement to sell itself to Inspire Brands for $106.50 a share.

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About Inspire

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Inspire has been very active in acquiring public restaurant brands over the years. Most notably, Inspire closed its acquisition of Buffalo Wild Wings in early 2018, and months later it reached a deal to acquire Sonic Drive-In.

Inspire also owns Arby’s, Jimmy John’s, Moe’s Southwest Grill, Jamba juice shops, and Auntie Anne’s pretzels. Inspire is backed by the private-equity firm Roark Capital. The acquisition of Dunkin will transform Inspire to become the second-largest U.S. restaurant operator in terms of domestic sales after McDonald’s Corporation (NYSE: MCD).

Deal details

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Dunkin confirmed early last week it is in talks to sell itself to Inspire. On Friday, the two sides confirmed a deal that values Dunkin’ Brands at $11.3 billion, including debt. The $106.50 price tag implies a premium of around 30% to Dunkin’s 30-day volume-weighted average price and a premium of around 20% compared to Dunkin’s closing stock price on Oct. 23 which is prior to the confirmation of talks.

Inspire confirmed talks between the two sides dates back prior to the COVID-19 pandemic, according to The Wall Street Journal. The pandemic naturally disrupted talks as work-from-home trends across the U.S. severely impacted Dunkin’s important breakfast daypart sales.

The transaction is the second largest in the restaurant group in the past decade. The only deal with a higher price tag was Retaurant Brands Interntional Inc.’s (TSE: QSR) 2014 acquisition of famed Canadian coffee chain Tim Hortons.

Here is a summary of how Restaurant Brands performed in its most recent quarter.

Dunkin will become once again a private company. The chain was bought out by private equity investors in 2006 for $2.43 billion and returned to the public market in 2011.

What’s next for Inspire

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But Dunkin said in its Thursday earnings report that U.S. same-store sales were actually higher in the third quarter. 

Inspire and Dunkin expects the deal to close before the start of 2021. Once the transaction is complete, Inspire would oversee 32,000 restaurants that generate $27 billion in combined sales and count 600,000 company and franchise employees.

All of Dunkin’ stores are run by its franchisees and this is consistent with all of Inspire’s brands. 

The deal also gives Inspire new exposure to international markets. More than 40% of its 21,100 total stores are located outside of the U.S., according to WSJ.

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