Dunkin' Brands Is 2018's First Go-Private Rumor; Shares Benefit

Dunkin Brands Group Inc DNKN holds the title as 2018's unofficial first subject of a go-private rumor. Germany's JAB Holding, a private investment firm that has been active in buying American coffee companies and restaurants, is looking to continue the trend in 2018.

JAB's partner and chairman Bart Becth told a German newspaper it is looking to raise money from investors to fund further acquisitions, Reuters reported.

It is important to note that Dunkin Brands wasn't mentioned in the report, but that isn't stopping Wall Street speculation. Dunkin Brands was mentioned multiple times throughout 2017 as a potential acquisition target,

The Analyst

Maxim Group's Stephen Anderson maintains a Buy rating on Dunkin Brands with a price target boosted from $64 to $71.

The Thesis

Dunkin Brands, the parent company of Dunkin' Donuts and Baskin-Robbins, is one of the "strongest" quick service restaurant acquisition targets, Anderson said in a Tuesday note. (See the analyst's track record here.) 

An acquiring company could realize comp growth and geographic expansion opportunities in both the U.S. and international markets through Dunkin Brands, Anderson said. 

The coffee and snack segment of the restaurant industry boasts a higher growth profile than other segments, and Dunkin Brands also holds operates an "increasingly lucrative" licensing business, the analyst said. 

JAB Holdings is unlikely to pursue new deals until it is has "digested" recent acquisitions, the most recent of which include Panera Bread and Au Bon Pain, Anderson said. 

"We thus contend DNKN's best likehlihood for M&A will come from a multinational, multiconcept franchise operator." 

Price Action

Shares of Dunkin Brands hit a new 52-week high of $66.28 Tuesday morning and were up 1.71 percent at $65.57 at the time of publication. 

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Posted In: coffeeJAB HoldingsMaxim GroupPanera BreadStephen AndersonAnalyst ColorNewsPrice TargetReiterationRestaurantsM&AAnalyst RatingsGeneral