People wear protective face masks outside Dunkin & # 39; Donuts on the Upper West Side as the city resumes Phase 4 reopening after restrictions were imposed in New York City on July 28, 2020 to slow the spread of the coronavirus.
Noam Galai | Getty Images
Dunkin & # 39; s shares rose 15% on Monday after the company confirmed sales talks with Inspire Brands, the privately held owner of Arby & # 39; s and Jimmy John & # 39; s.
The New York Times, which broke the news of the discussions, reported that the deal is valued at $ 8.8 billion, or $ 106.50 per share. The price corresponds to a premium of 20% compared to the closing price of Dunkin on Friday. The shares are currently trading at $ 102.55, giving the company a market value of $ 8.4 billion. The stock is up 38% this year.
The coronavirus pandemic and disruption of normal coffee drinkers' routines impacted Dunkin's sales, reducing U.S. sales by 18.7% in the second quarter. However, the thoroughfares are helping the sales recovery, along with new beverage offerings and a partnership with TikTok star Charli D & # 39; Amelio. Rival Starbucks reported a steeper 40% drop in U.S. sales in the same store last quarter.
"We believe that Dunkins' comparatively healthy return on sales is reflected in the convincing take-out price," wrote Cowen analyst Andrew Charles in a message to customers on Sunday.
Charles also said that Dunkin's business is much healthier than Inspire's other publicly traded acquisitions that have been seen as turnarounds.
Jefferies analyst Andy Barish said he did not expect a competing bid for Dunkin 'given the valuation of the business and the strategic opportunities for Inspire. For example, adding Dunkin & # 39; to its portfolio would more than double Inspire's total number of restaurants and add more international markets to the market's presence.
With business conditions improving, Christopher Carril, an analyst at RBC Capital Markets, expects more large, multi-brand restaurant companies to consider acquisitions. Potential buyers include Restaurant Brands International, Yum Brands and Darden Restaurants.