Dunkin’ Brands Group Inc., operator of the Dunkin’ Donuts coffee chain, is seeking to raise as much as $460.6 million in its initial public offering, 15 percent more than the company planned in May.
Dunkin’ Brands is offering 22.3 million shares for $16 to $18 each, the Canton, Massachusetts-based company said in a filing with the U.S. Securities and Exchange Commission today. The company may sell an additional 3.33 million shares, given sufficient demand.
Taken private in 2006 by Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP, Dunkin’ follows private equity-backed companies such as HCA Holdings Inc. and Kinder Morgan Inc. in returning to the public market this year after leveraged buyouts. Private equity owners have completed the biggest U.S. IPOs in 2011 as a rising U.S. stock market increased investors’ demand for companies acquired through debt-fueled acquisitions.
“After the market has done so well, from a timing point of view it’s a good idea to get it done now,” Hugh Johnson, who oversees about $2 billion as chairman of Albany, New York-based Hugh Johnson Advisors LLC, said in an interview. “If I were in the private equity business, I’d be trying to raise liquidity as fast as I could.”
While the Standard & Poor’s 500 Index has rallied 31 percent from July 2, 2010, there’s risk that Europe’s debt crisis and China’s efforts to curb inflation may pull stocks back down, Johnson said.
Bain, Carlyle and Thomas H. Lee paid about $2.43 billion five years ago for Dunkin’, which competes with coffee chains such as Starbucks Corp. and Canada’s Tim Hortons Inc.
The three firms each contributed $345.5 million of equity to the deal in addition to management’s $25 million, with the rest of the cost financed with debt, according to a letter to investors from Carlyle. Carlyle marked its investment at 1.55 times as of March 31, according to the letter, putting the enterprise value of the company at $3.5 billion, including $1.8 billion in long-term debt.
A record $1.6 trillion in leveraged buyouts were completed from 2005 to 2007, according to Preqin Ltd., a London-based research firm.
Dunkin’ filed on May 4 to raise as much as $400 million in an IPO. All of the shares in the offering will be sold by Dunkin’, and proceeds will be used to repay debt, according to regulatory filings. The company had about $1.8 billion of net long-term debt as of March 26.
Sales at Dunkin’ Brands increased 9.3 percent to $139.2 million in the three months ended March 26 from a year earlier, according to the company’s regulatory filings today. The company booked a net loss of $1.72 million, compared with a profit of $5.94 million in the year-earlier period.
The chain has introduced several menu items this year to bring in customers during the slower afternoon period. In April, the restaurant began selling snacks including apple pies, stuffed breadsticks and bagel twists.
The doughnut chain has more than 16,000 locations in 57 countries under the Dunkin’ Donuts and Baskin-Robbins brands, according to the filing. Bill Rosenberg founded his first restaurant in the 1940s, which was later renamed Dunkin’ Donuts.
The stock will trade on the Nasdaq Stock Market under the ticker symbol DNKN.
Dunkin’s offering is being led by JPMorgan Chase & Co., Barclays Plc, Morgan Stanley, Bank of America Corp. and Goldman Sachs Group Inc.
The company aims to complete the offering by the end of July, two people familiar with the plans said last month. The timing of the IPO is subject to change based on market conditions and demand for the shares.