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Everybody's Lovin' Dunkin'

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Investors are showing a great deal of confidence in Dunkin' Brands and its potential for growth. Yesterday, the firm, currently owned by the private equity consortium of Bain Capital Partners, Carlyle Group and THL Partners, filed for its long-awaited IPO.

Even in a market that hasn't favored public offerings, Dunkin's owners were able to price the coffee chain/ice cream shop operator at $19 per share, above the expected range and the offering is already oversubscribed, at 22.25 million shares.

Dunkin's main appeal lies in the fact that the chain has yet to create a sizable presence on the West Coast of the United States. In recent years, as consumers have become more price-conscious, Dunkin' made significant headway in its competition with Starbucks for the top spot in the U.S. coffee wars. But it has no presence in states like California and Washington, which remain Starbucks' territory--at least for now.

According to an analyst quoted in the New York Times story:

“Part of the attraction of Dunkin' Donuts is that there is significant opportunity for store openings,” said Bart Glenn, an analyst with D. A. Davidson & Company who also covers Starbucks, a Dunkin' rival. “Dunkin' has broad customer appeal, and they've done a good job of delivering high quality coffee.”

Update:

Dunkin' shares are now trading at $25 apiece.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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