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Monday, July 11, 2011

Dunkin' Donuts' parent company announces IPO (Nasdaq - DNKN ) price range $16 - $18 a share

--22.25 million shares to be sold at $16 to $18

--no date set yet for initial trading Dunkin Donuts 3 Pack Holiday Sampler Coffee Gift

--proceeds to repay debt, for working capital

Dunkin' Donuts Coffee Ground Original, 12-Ounce Packages (Pack of 2)

Doughnut chain Dunkin' Brands Group Inc. came one step closer to throwing open its doors to a public offering Monday, setting the price terms for its deal.

The company wants to sell 22.25 million shares at a price between $16 and $18, for a raise of $400 million. It plans to trade on the Nasdaq under the symbol DNKN.

Though most IPOs immediately launch a marketing road show and begin trading about two weeks after they have filed their terms, people close to the deal say the road show hasn't launched and the date of trading hasn't been fixed yet.

Dunkin Brands franchises quick-service restaurants that serve coffee and baked goods under its Dunkin' Donuts brand as well as Baskin-Robbins ice cream.

In 2006, the Massachusetts-based company was purchased from liquor company Pernod Ricard S.A. for $2.4 billion in cash by a trio of private-equity firms: Bain Capital Partners LLC, The Carlyle Group and Thomas H. Lee Partners. It's the latest private-equity-backed offering to arrange to go public in the U.S. this year.

Earlier this year, private-equity-backed hospitals operator HCA Inc. (HCA) and energy company Kinder Morgan Inc. (KMI) completed successful IPOs of more than $1 billion each. While the offering from Dunkin' Brands isn't as big as either of those deals, the company's brand recognition is quite high among investors; both Dunkin' Donuts and the Baskin-Robbins brands date back to the 1940s.

In fiscal 2010, which ended Dec. 25, the company's total revenue rose 7% to $577 million compared to fiscal 2009, primarily on higher systemwide sales from Dunkin' Donuts. Operating income increased 5% to $194 million. Net income decreased 23% to $27 million for fiscal 2010 due to a $62 million pretax loss on debt extinguishment. Same-store sales rose 2.3% at Dunkin' Donuts and declined 5.2% at Baskin-Robbins.

plans to raise as much as $461 million when it takes the company public, up from the $400 million it originally estimated.

Darron Cummings, AP

Bags of coffee sit on the shelves at a Dunkin' Donuts store in Indianapolis, Indiana, October 14, 2010.

EnlargeCloseDarron Cummings, AP

Bags of coffee sit on the shelves at a Dunkin' Donuts store in Indianapolis, Indiana, October 14, 2010.

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Dunkin' Brands, which runs Dunkin' Donuts and Baskin-Robbins, disclosed the estimated pricing in a regulatory filing on Monday. It didn't say when the stock might start trading.

The company's current owners, a coterie of three well-known private equity firms, will continue to play a powerful role at the company even after it goes public. Together, Bain Capital, Carlyle Group and Thomas H. Lee Partners will own as much as 78% of the public Dunkin' Brands, which will make it nearly impossible for any dissident shareholders to effect substantial changes. The three firms control six of the nine seats on the board of directors.

Dunkin' Brands said it plans to use the money to pay down its substantial debt load, although it could also be hoping to have money left over for expansion plans. The Massachusetts-based company wants to grow outside its U.S. stronghold, the Northeast. It also is expanding internationally, with South Korea and the Middle East currently on its radar. The company says it has no plans to pay shareholder dividends "for the foreseeable future."

Dunkin' Brands' transition into a public company — it first announced its intentions in May — has also led it to pull back the curtain on its operations for potential shareholders. Its regulatory filing noted that CEO Nigel Travis made $5.5 million in 2010, mostly from $4 million in option awards.

The company said it will offer approximately 22.3 million shares on the open market, and it expects investors to pay $16 to $18 per share. The company will also give its underwriters a 30-day window to purchase another 3.3 million shares.

If all shares are bought at $18 each, the company would raise about $461 million before expenses.

However, the company said it expects to make about $348 million, after deducting underwriting expenses. That assumes that shares prices at the $17 midpoint and that the underwriters do not purchase additional shares.

Dunkin' Brands plans to trade on the Nasdaq under the ticker symbol DNKN

Dunkin Brands plans to use the proceeds to repay debt and for working capital and general corporate purposes, according to a filing with the Securities and Exchange Commission.

Joint bookrunners on Dunkin' Donuts offering are J.P. Morgan Chase & Co. (JPM), Barclays PLC's (BCS, BARC.LN) Barclays Capital Inc., Morgan Stanley (MS), Bank of America Corp.'s (BAC) Bank

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