Dunkin’ Brands on Sunday confirmed that it is negotiating a deal to be bought up by private-equity-backed company Inspire Brands. However, the owner of Dunkin' Donuts and Baskin Robbins fast-food restaurant chains cautioned that there is no certainty that a final agreement will be reached.
Earlier, The New York Times had reported that Dunkin’ Brands (DNKN) is nearing an $8.8 billion deal with Inspire Brands. According to the report, the transaction could be announced as early as Monday. The deal value represents approximately 20% premium to Dunkin’ Brands’ market capitalization as of Friday’s closing price.
Shares of Dunkin’ Brands closed at $88.79 on Friday, reflecting a market capitalization of about $7.31 billion. (See DNKN stock analysis on TipRanks).
On Oct. 23, KeyBanc analyst Eric Gonzalez raised the stock’s price target to $97 (9.3% upside potential) from $78 and reiterated a Buy rating. Gonzalez’s revised price target reflects faster-than-expected same-store-sales recovery for the company's US segment. The analyst pointed out that the research firm’s Key First look Data depicts that Dunkin’ Brands’ US same-store-sales trends have turned positive in recent weeks as consumers resumed normal routine along with benefits from the company’s initiatives including digital adoption, celebrity endorsement, and new menu.
Currently, the Street is cautiously optimistic on the stock. The Moderate Buy analyst consensus is based on 9 Buys and 9 Holds. With shares up 17.5% year-to-date, the average price target of $81.13 implies downside potential of about 8.6% to current levels.