Dunkin' Brands files for $400 mln IPO

BANGALORE Wed May 4, 2011 10:18pm IST

One pound bags of Dunkin' Donuts Original Blend coffee are on display at a Dunkin' Donuts store in Tewksbury, Massachusetts December 20, 2005.  REUTERS/Jessica Rinaldi/Files

One pound bags of Dunkin' Donuts Original Blend coffee are on display at a Dunkin' Donuts store in Tewksbury, Massachusetts December 20, 2005.

Credit: Reuters/Jessica Rinaldi/Files

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BANGALORE (Reuters) - Private equity-backed Dunkin' Brands Group Inc, known for its Dunkin' Donuts and Baskin Robbins ice cream, plans to go public with a $400 million offering, the latest in a slew of buyout-backed floats in the United States.

Four of the world's top-10 IPOs this year have been buyout-backed U.S. share floats -- consumer research firm Nielsen Holdings, Florida lender BankUnited Inc, pipeline company Kinder Morgan Inc and hospital operator HCA Holdings Inc.

Analysts expect the planned IPO to be well received given the company has growth potential both at home and abroad.

"Given it has a strong brand, a large retail presence and consumer package line, and Baskin Robbins, which gives it a nice diversification, I'd suspect it would garner more of a premium valuation," said analyst Conrad Lyon of B.Riley & Co.

"People know it for its coffee and, because they're users of the product, and like the product, they may want to be involved from an investment standpoint," he added.

A number of fast-food and cafe chains, including Dunkin' Brands and Starbucks Corp, have flocked to India, Asia's third-largest economy, where the quick-service restaurant market is worth $13 billion and is growing at 25-30 percent.

In February, Indian fast-food operator Jubilant Foodworks Ltd said it would partner Dunkin' Donuts to bring its brand to India.

INPUT COSTS

The IPO comes as increasing commodity costs force doughnut chains to raise prices. Rival Krispy Kreme Doughnuts Inc has said it expects to push up its prices to counter rising input costs.

Analysts said this should have little bearing on the IPO.

"The stock will do very well. Restaurants in general are in favour on Wall Street right now and I think Dunkin' Brands will be well received," said analyst Sam Yake at BGB Securities.

Dunkin' Brands was taken private in 2005 by a consortium including Bain Capital, Carlyle Group and Thomas H. Lee Partners in a $2.4 billion deal.

Previously part of Allied Domecq, it competes with Dairy Queen, Cold Stone Creamery and Starbucks Corp. When Pernod Ricard, the world's No.2 spirits maker, acquired Allied Domecq in 2005, it ditched the Dunkin' Brands businesses.

Dunkin' Brands, with over 16,000 outlets in 57 countries, earned $26.9 million on revenue of $577.1 million in the year ended Dec. 25.

Dunkin' Brands intends to use the IPO proceeds to repay debt, and for working capital.

The IPO filing did not reveal how many shares would be offered or the expected price. The company intends to list under the symbol "DNKN" on Nasdaq.

J.P. Morgan Securities, Barclays Capital and Morgan Stanley & Co Inc will be lead underwriters for the offering, and BofA Merrill Lynch and Goldman Sachs & Co will be joint book-running managers.

No shares are being offered by existing shareholders.

Reuters previously reported the company picked Barclays, JPMorgan and Morgan Stanley as active bookrunners, and Bank of America and Goldman Sachs as passive bookrunners on the planned IPO.

(Reporting by Helen Chernikoff in New York and Brenton Cordeiro in Bangalore, editing by Gerald E. McCormick, Maju Samuel)

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