Dunkin' Brands, the parent company of the Dunkin' and Baskin Robbins chains, is nearing a deal to sell itself to a private equity-backed company, Inspire Brands, that could be announced as soon as Monday, two people with knowledge of the negotiations said.
The deal being discussed would take Dunkin' Brands private at a price of $106.50 a share, these people said. That would be a 20% premium over the company’s closing price 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% 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.
The two people requested anonymity because the talks are confidential, and they cautioned that the deal was not yet final and could still fall apart.
The company 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.
Michelle King, a spokeswoman for Dunkin', told The Times, “As a public company it is our policy not to comment on rumors or speculation.” A spokesman for Inspire Brands had no comment.
During the pandemic, Dunkin' has been bolstered by its drive-thrus 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% 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.
This article originally appeared in The New York Times.