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Dunkin’ Brands to go private in $11.3 billion deal with owner of Arby’s and Sonic

Acquisition will end nine years of independence as a publicly traded company

Dunkin' Brands supports more than 12,500 Dunkin' locations and nearly 8,000 Baskin-Robbins locations, all owned by franchisees.
Dunkin' Brands supports more than 12,500 Dunkin' locations and nearly 8,000 Baskin-Robbins locations, all owned by franchisees.Pat Greenhouse/Globe Staff

After days of speculation, Dunkin' Brands made it official Friday night: The Canton-based parent of the Dunkin' and Baskin-Robbins chains will be sold to the private-equity-backed parent of the Arby’s and Sonic fast-food chains in a deal valued at $11.3 billion.

The news out of Dunkin' headquarters in Canton confirmed the purchase price from Atlanta-based Inspire Brands that The New York Times reported last Sunday of $106.50 a share. That values Dunkin' at about $8.8 billion, but the companies value the deal at more than $11 billion once the assumption of Dunkin' Brands' debt is included. The boards of Inspire and Dunkin' have unanimously approved the deal.

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The acquisition, expected to close by the end of the year, will end nine years that Dunkin' spent on the public market and will mark a return to the world of private equity. Private equity firms Carlyle Group, Bain Capital, and Thomas H. Lee Partners bought Dunkin' in 2006 and took it public in 2011.

Paul Brown created Inspire in 2018 as what was then Arby’s Restaurant Group, which Brown led at the time, completed the $2.9 billion purchase of Buffalo Wild Wings, with a stated goal of building a restaurant empire with distinct brands representing different kinds of restaurants. His cofounder at Inspire is Neal Aronson, a top executive at Inspire’s majority owner, Roark Capital Group, an Atlanta private equity firm.

Inspire is paying a big premium with this all-cash deal: 20 percent over the Dunkin' share price on Oct. 23, before news of the deal broke last weekend. The shares had already been climbing steadily before that point, prompting some insiders to wonder if a deal was afoot. The deal price represents a 30 percent premium over the average price for the last 30 days of trading.

Analysts speculate that Inspire is willing to pay big to buy a company that has proven itself during the COVID-19 pandemic, in particular with Dunkin’s drive-through capabilities and on-the-go ordering app.

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On Thursday, the company reported that sales at its US Dunkin’ stores open at least a year rose 0.9 percent in the three months that ended on Sept. 26, despite losing the hordes of morning commuters who were once its bread-and-butter. Its sister chain, Baskin-Robbins, saw even stronger growth: US same-store sales rose 6.5 percent. The company’s overall quarterly revenue rose 1.6 percent, to $361.5 million. Sales at US stores have been steadily improving over the course of the summer, even though many of its shops have not been reopened for sit-down dining.

“Today’s announcement is a testament to our world-class group of franchisees, licensees, employees, and suppliers who have worked together to transform Dunkin' and Baskin-Robbins into modern, relevant brands," Dave Hoffmann, the CEO of Dunkin' Brands, said in a statement. “This team’s grit and determination has enabled us to deliver outsized performance and made our brands among the most elite in the quick service industry. I am particularly proud of our actions since March of this year. During the global pandemic, we have stood tall. We’ve had each other’s backs and are now stronger than ever.”

Dunkin' employs about 1,100 corporate workers worldwide, including roughly 670 in Massachusetts.

Dunkin' Brands supports more than 12,500 Dunkin' locations and nearly 8,000 Baskin-Robbins locations, all owned by franchisees, following the closures of hundreds of Dunkin' shops this year. Collectively, the company’s shops generated about $12 billion in systemwide sales in 2019. Inspire’s portfolio includes more than 11,000 Arby’s, Buffalo Wild Wings, Sonic, Rusty Taco, and Jimmy John’s restaurants, with $15 billion in annual systemwide sales.

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Dunkin' can trace its roots to a coffee shop that opened in Quincy more than 70 years ago. It eventually became not only a franchising behemoth but also was inextricably linked with the culture and character of New England over the years. The Dunkin' coffee cup became an essential prop for movies set in Boston. Baskin-Robbins, meanwhile, was started in 1945 in California, and eventually grew into what the company calls “the world’s largest chain of ice cream specialty shops.”

Morningstar analyst R.J. Hottovy said in a note that Dunkin' and Baskin-Robbins will complement Inspire’s existing brand portfolio from a geographic perspective: Dunkin' could find potential franchisees from existing Arby’s and Sonic franchisees in the South and West, for example.

In a note about the sale of the company, RBC Capital Markets analyst Christopher Carril said he expects consolidation in the restaurant industry “to come into greater focus as the advantages of scale become even more clear in the evolving operating environment."


Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.