Sweet day for Dunkin’s as shares wolfed

HUNGRY investors snapped up shares in the owner of US snack chain Dunkin’ Donuts on its first day of trading yesterday, sending them up almost 50 per cent by the close.

Dunkin’ Brands, which also owns ice cream seller Baskin-Robbins, raised its planned $422.8m (£258m) through a Nasdaq initial public offering after pricing its offering at a higher-than-expected $19 per share.

But its shares were already 32 per cent above that by the time the market opened and soared 49.9 per cent in high demand to close at $28.49. Shares hit highs of $29.62 in trading throughout the day.

The 22.25m share sale valued Dunkin’ at 4.2 times 2010 sales and gave it a $2.4bn market capitalisation – but its closing price raised its market cap to more than $3.5bn.

The company has about 9,800 Dunkin’ Donuts stores and 6,500 Baskin-Robbins shops in 57 countries worldwide, making it smaller than rivals Starbucks and McDonald’s.

It was bought by private equity houses Bain, Carlyle and Thomas H Lee for $2.43bn in 2006 but is now heavily leveraged and saw 75 per cent of its $45m first-quarter operating earnings used for debt service. Its revenues rose nine per cent to $139m in that quarter.

Lawrence Levine, managing director of accountant RSM McGladrey, said the market priced Dunkin’ closely to Starbucks, although it has more debt and owns fewer of its shops.

Lead underwriters were JP Morgan, Barclays Capital, Morgan Stanley, BofA Merrill Lynch and Goldman Sachs. It trades under ticker DNKN.


● Raises $422.8m after pricing IPO at $19
● Shares closed up 49.9 per cent at $28.49, giving it a market capitalisation of more than $3.5bn
● Dunkin’ Brands has 16,300 stores worldwide