Inspire and Dunkin

Inspire Brands and Dunkin' made their rumored engagement official Friday night and illuminated some key details of the take-private acquisition.

We explored what exactly acquiring Dunkin' (NASDAQ:DNKN) might do for Inspire last week, and there's a lot of potential. Read our prior coverage here.

One thing the rumor mill didn’t get quite right was the price tag. Early indicators predicted an $8.8 billion deal, a premium that would, as Peter Saleh, an analyst at investment bank BTIG wrote, be "the highest acquisition multiple of a franchise operator in recent history."

Inspire announced it was going even bigger. According to the company, the final transaction will be $11.3 billion. That's a premium of about 30 percent to Dunkin' Brand's latest trading levels. That price consists of $106.50 per share and the assumption of Dunkin's $3.42 billion in debt.

Inspire CEO Paul Brown said there was a lot that went into that exceptional price tag.

“By joining Inspire, these brands will add complementary guest experiences and occasions to our current portfolio," said Brown in an announcement. "Further, they will strengthen Inspire through their scaled international platform and robust consumer packaged goods licensing infrastructure, as well as add more than 15 million loyalty members."

The acquisition will also add a projected $11 billion in sales and push Inspire Brands to $26 billion in systemwide sales.

A briefing especially highlighted the robust Dunkin' international platform, something Inspire is honing in an expansion to Mexico but will help propel growth overseas via a master franchising model, as Cowen analyst Andrew Charles wrote.

"Many of DNKN's international markets are operated by master franchisees that can presumably help accelerate development of Inspire's existing brands," wrote Charles.

The consumer packaged goods licensing infrastructure expands a lot of opportunities as well. Buffalo Wild Wings sauce is already in the condiment aisle, but with so many brands in the stable with proprietary items, the grocery and convenience markets are fertile grounds.

Dunkin' and franchisees also stand for some big benefits from the shared services model of Inspire. As Brown said at the outset of the company's formation, more brands means the ability to spend more and spread the benefits further.

Lastly, the deal brings together a lot of data. Dunkin's 15 million membership members more than doubles up Inspire's membership reach and means more data for the sales and marketing machine.

The deal is expected to close by the end of 2020. Barclays served as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel for Inspire. BofA Securities and Ropes & Gray LLP advised Dunkin'.

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