Dunkin' might sell itself for $8.8B and go private — but why?
The hot gossip in Canton, Mass... Dunkin' might go private. The Coolatta-and-cruller legend confirmed it's in sale talks with private equity-backed Inspire Brands (the owner of Arby’s, Sonic, and Jimmy John’s).
- Inspire wants some sugar with its salty lineup. So it's reportedly willing to drop nearly $9B to take Dunkin' private.
- Dunkin' stock surged 16% because the price represents a 20% premium over its Friday stock value. By buying Dunkin', Inspire would more than double its total restaurant locations.
Bang a U-ey... Dunkin' has been fancy-fying itself over the years. It dropped "Donuts" from its name, invested in flashy brewing systems, got its employees "espresso certified," and served up oat-milk lattes and Beyond Meat sandwiches. Drive-thrus, green tea Refreshers, and a buzzy deal with TikTok star Charli D’Amelio have boosted its biz during the pandemic.
- US same-store sales dipped 19% last quarter since you weren't hitting Dunkies before ice hockey practice.
- But Starbucks' sales fell 40% last quarter, making Dunkin' look like the Brady of corona coffee. Dunkin' stock has climbed much more than Starbs' this year.
This is the opposite of a regular PE deal... Rule #1 in the private equity playbook: find a struggling company, revamp it, and flip it for more. Dunkin' isn't a fixer-upper: it brought in a record $1.4B in sales and $242M in profit last year, and its stock is at an all-time high. But going private could shield it from the obligations and scrutiny that come with being public. That gives it more freedom to transform its brand.