MCD McDonalds Corp

By Heather Haddon 

Inspire Brands Inc. will buy Dunkin' Brands Group Inc. for $11.3 billion including debt, the companies said, setting up one of the largest restaurant deals in years as some in the industry think beyond the coronavirus pandemic.

The deal is the second-largest acquisition of a North American restaurant chain in at least a decade, behind the $13.3 billion deal for Tim Hortons by Restaurant Brands International Inc. in 2014, according to investment data provider Dealogic. Inspire, the owner of Arby's and other chains that is backed by private-equity firm Roark Capital, said the deal will make it the second-largest U.S. restaurant chain by domestic sales after McDonald's Corp. The deal is expected to close by the end of the year, the companies said on Friday.

Talks between the companies started before the pandemic, according to Inspire. The pandemic complicated negotiations, Inspire's Chief Executive Paul Brown said, in part because it caused a steep drop in Dunkin's core breakfast sales. Chains focused on breakfast sales have been hit hard by the end of daily commutes and school runs.

Mr. Brown said that he believes consumers will get back to their old routines after the pandemic is over and that the chain's drive-throughs were attractive. During the pandemic, chains with drive-throughs have benefited from being able to maintain that relatively low-contact avenue for sales.

Dunkin' on Thursday reported a U.S. same-store sales increase of 1% in its quarter ended in September, and said that sales remained up in its current period.

"There's an opportunity for the right kind of brand doing the right thing to actually take advantage when those habits are rebuilt," Mr. Brown said in an interview.

Dunkin' CEO Dave Hoffman said in a statement that the deal will help the company's franchisees continue to grow their businesses.

Inspire said its all-cash deal to take the owner of Dunkin' coffee shops and Baskin-Robbins ice cream stores private would value it at $106.50 a share, a 20% premium to its closing price on Oct. 23, before the New York Times reported last weekend that the two companies were discussing a possible deal.

More to come...

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

October 30, 2020 20:33 ET (00:33 GMT)

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