NEW YORK – Dunkin’ Brands Group Inc., the operator of Dunkin’ Donuts coffee shops, raised $422.8 million in its U.S. initial public offering, pricing its shares above the top end of the marketed range.
The Canton, Mass.-based company sold 22.3 million shares at $19 each yesterday, according to a statement, after offering them for $16 to $18. The shares will trade today on the Nasdaq Stock Market under the symbol DNKN, it said.
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Dunkin’s IPO is one of 12 planned in the U.S. this week, the biggest number of weekly deals since November 2007, Bloomberg data show. The doughnut seller enticed investors with plans to more than double its U.S. locations in 20 years, after outpacing McDonald’s Corp.’s revenue growth last year.
Dunkin’ planned to use the proceeds from its IPO to repay debt accumulated under the ownership of private-equity firms Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP, according to its regulatory filing. The firms paid about $2.43 billion for the company in a 2006 leveraged buyout.
At the end of March, Carlyle marked its investment at 1.55 times, it said in a letter to investors, putting the enterprise value of the company at $3.5 billion, including $1.8 billion in long-term debt. All three firms planned to sell shares in the IPO, according to the prospectus, each cutting their stake to 26 percent from about 32 percent.
Emerging From Buyouts
The biggest U.S. IPOs this year have been brought by private-equity firms. HCA Holdings Inc., the hospital chain partly owned by KKR & Co. and Bain, raised $4.4 billion in March in the biggest-ever private equity-backed IPO, according to London-based Preqin Ltd. Kinder Morgan Inc., the energy-pipeline company whose owners include Carlyle, raised $3.3 billion in its February IPO.
At the IPO price, Dunkin’s market capitalization is about $2.4 billion. Completion of the IPO would leave the company with about $1.48 billion of long-term net debt and $56.6 million of cash, according to the IPO prospectus, giving it an enterprise value of about $3.82 billion. That’s about 57 percent higher than the private-equity firms paid when they bought Dunkin’ from Pernod Ricard SA.
The $2.4 billion market cap values Dunkin’ at about 4.1 times trailing 12-month sales, compared with 2.7 times for Starbucks Corp. based on its closing share price yesterday.
New Locations
In the U.S., where it has about 6,800 points of distribution, mostly in New England and New York, Dunkin’ plans to open as many as 250 new locations per year in 2011 and 2012, with a goal of 15,000. The chain has about 9,800 global locations. Dunkin’ also franchises about 6,500 Baskin-Robbins ice cream shops globally, its filing showed.
Revenue at Dunkin’ last year jumped 7.3 percent, compared with 5.8 percent at McDonald’s, the world’s biggest restaurant chain, which serves the McCafe line of coffees.
JPMorgan Chase & Co., Barclays Plc, Morgan Stanley, Bank of America Corp. and Goldman Sachs Group Inc. led the Dunkin’ offering. Underwriters have an option to buy an additional 3.3 million shares within 30 days.
