Dunkin Brands (DNKN) will take its Dunkin' Donuts and Baskin-Robbins ice cream chains private after agreeing to be acquired by Inspire Brands in an $11.3 billion deal.

The owner of Arby's, Buffalo Wild Wings, and Sonic will pay $106.50 per share in cash for Dunkin', a 20% premium to its closing price on Oct. 23, when it was first reported the companies were considering a merger.

Donuts and coffee

Image source: Dunkin Brands.

A growing empire

Inspire was created by the merger of Arby's and Buffalo Wild Wings in 2018, and it went on to also acquire Jimmy John's Gourmet Sandwiches last year. 

Buying Dunkin' would be its most expensive purchase, with the value of the deal pegged at over 22 times its estimated 2021 EV-to-EBITDA ratio. In contrast, the acquisition of Buffalo Wild Wings was less than half that, or 10 times EV-to-EBITDA, while Sonic's multiple was 15.

Dunkin' initially stumbled early in the coronavirus pandemic, as its breakfast daypart was hurt by business closures, lockdowns, and stay-at-home orders. The doughnut shop, however, returned to same-store-sales growth in the third quarter, with comps up 0.9% from last year. Baskin-Robbins' comps were 6.5% higher.

CEO David Hoffmann told analysts recently, "America's morning ritual has been upended with customers working and children attending school from home." 

That required Dunkin' to respond to consumers visiting its stores later in the day by simplifying its menu and adding new snacks and beverages that appealed to the new times people were coming in.

The combined company will have $26 billion in systemwide sales and more than 31,600 restaurants in over 60 countries. There are more than 12,500 Dunkin' locations and almost 8,000 Baskin-Robbins restaurants around the world. 

The deal is expected to close by the end of 2020.