Dunkin’ Brands agreed to sell to Inspire Brands on Friday.
Inspire will pay Dunkin’ shareholders $106.50 per share.
Dunkin’ investors will receive a 30% premium over a 30-day average.
Dunkin’ Brands Group Inc. (NASDAQ: DNKN), the parent company of the Dunkin’ coffee chain and Baskin-Robbins ice cream chain, confirmed on Friday that it has reached an agreement to sell to Inspire Brands for $106.50 per share.
Inspire has been very active over the years in the acquisition of public restaurant brands. Most notably, in early 2018, Inspire completed the acquisition of Buffalo Wild Wings, and months later, a deal was closed to acquire Sonic Drive-In.
Inspire also owns Arby’s, Jimmy John’s, Moe’s Southwest Grill, Jamba juice stores and Aunt Anne’s pretzels. Inspire is backed by private equity firm Roark Capital. The acquisition of Dunkin makes Inspire the second largest U.S. restaurant operator after McDonald’s Corporation (NYSE: MCD) in terms of domestic sales.
Dunkin confirmed early last week that he is in talks to sell to Inspire. On Friday the two sides confirmed a deal that values Dunkin’ Brands at $11.3 billion, including debt. The price tag of $106.50 represents a premium of approximately 30% over Dunkin’s 30-day volume-weighted average price and a premium of approximately 20% over Dunkin”s closing price on October 23rd, which is prior to confirmation of the talks.
According to The Wall Street Journal, the confirmation of the talks between the two sides dates back to the period prior to the COVID 19 pandemic. The pandemic naturally interrupted the talks as “work-from-home” trends in the U.S. severely impacted Dunkin’s important breakfast day-end sales.
The transaction is the second largest of the restaurant group in the last ten years. The only deal with a higher price tag was the acquisition of the famous Canadian coffee chain Tim Hortons by Retaurant Brands Interntional Inc. (TSE: QSR) in 2014.
Here is a summary of Restaurant Brands’ performance in the last quarter.
Dunkin becomes a private company again. The chain was bought by private equity investors for $2.43 billion in 2006 and will return to the public market in 2011.
What’s next for Inspire?
But Dunkin said in its earnings report on Thursday that sales in the same stores in the US were actually higher in the third quarter.
Inspire and Dunkin expect the deal to close before the beginning of 2021. Upon completion of the transaction, Inspire would oversee 32,000 restaurants, which have combined sales of $27 billion and employ 600,000 corporate and franchise employees.
All Dunkin’ stores will be operated by its franchisees, and this is consistent with all Inspire brands.
The agreement also gives Inspire new access to international markets. According to WSJ, more than 40% of the company’s 21,100 stores are located outside the United States.