Inspire Brands, a restaurant company on Friday announced that they would acquire Dunkin’ Brands. Dunkin’ Brands is the owner of Dunkin’ Donuts and also the popular ice cream chain, Baskin-Robbins. According to reports, the deal would be worth $ 8.8 billion.
According to the company statement, acquiring Dunkin’ Brands including debt will cost a total of $ 11.3 billion.
Inspire Brands already has ownership of several popular restaurant chains like Buffalo Wild Wings, Sonic Drive-in, and Jimmy John’s.
The Dunkin’ chain has always been quite popular and has been known for its variety of Donuts, coffee, and sandwiches. The brand was created in 1950 in the northeastern state of Massachusetts in the United States of America.
On the other hand, the ice cream chain Baskin Robbins has made a name for itself for the 31 flavors of ice cream that they offer. The company has been operating since 1945.
Together, the two brands have more than 20,000 distribution points in more than 20 countries.
Completing the deal, Inspire Brands will grow from 11,000 restaurants to more than 31,000 units with the addition of Dunkin’s over 20,000 restaurants. This would make it one of the largest multi-brand platforms in the industry. Inspire Brands is looking to emerge as a rival of Yum Brands, which has 50,000 restaurants across its four brands.
Inspire Brands will also bring in over $ 1 billion in revenue and an estimated $ 12 billion in systemwide sales, based on Dunkin’s 2019 year end results. Inspire Brands, which previously had about $ 14.6 billion in system sales, together with Dunkin’ Brands would make systemwide sales of $ 26 billion.
On the report of the transaction, BTIG said, “The acquisition makes sense as it gives Inspire an established national brand with Dunkin’, more significant exposure to the breakfast daypart and a concept with significant long-term unit potential. That said, these attributes come with a hefty valuation that is significantly above comparable acquisitions over the past decade and Inspire’s own previous acquisitions.”
Dunkin’ Brands have suffered from the COVID-19 pandemic and the enforced lockdown across the globe to restrict the spread of the virus. This also resulted in the temporary or permanent closure of their stores as their turnover of the parent company fell by six percent in the first nine months of the year.
Although now, the company is in a much stable position than it was at the start of the pandemic. The company is in the process of closing more than 800 underperforming units. The company’s US same-store sales grew by 1 percent in Q3 2020 after a decline of 18.7 percent in Q2 2020.
Dunkin’ Brands CEO Dave Hoffman said in the release, “We are excited to bring meaningful value to shareholders who have been with us on this journey and believe that Inspire Brands… will continue to drive growth for our franchisees while remaining true to all that is unique and special about the Dunkin’ and Baskin-Robbins brands.”
He also added that the brands Dunkin’ and Baskin Robbins “will strengthen Inspire through their scaled international platform and robust consumer packaged goods licensing infrastructure, as well as add more than 15 million loyalty members.”
Inspire Brands, which was founded in 2018 under private equity firm Roark Capital would pay $ 106.50 per Dunkin’ share in cash. According to BTIG, the acquisition is 10 times the premium to that of Sonic and would be the highest amount paid for a franchised business in the past 10 to 15 years. The acquisition, which is subject to certain conditions is expected to be finalized by the end of the year.