British Firm to Acquire Dunkin’ Donuts

Two months after rejecting a hostile takeover bid from a Canadian group, Dunkin’ Donuts said today it reached a $325-million agreement for acquisition by a British food and drink corporate giant.

Under the definitive agreement, Allied-Lyons PLC will acquire outstanding shares of the coffee and doughnut shop franchiser’s common stock with a cash tender offer at $47.25 per share on or before Nov. 24. Shearson Lehman Hutton Inc. will act as dealer manager for the offer.

Trading over the counter on the New York Stock Exchange just after the market opened today, Dunkin’ Donuts stock was up 37.5 cents to $46.875.

“The combination with Allied-Lyons will clearly strengthen our position as the world’s largest coffee and doughnut chain. We look forward to building upon our accomplishments as part of the Allied-Lyons team,” said Dunkin’ Donuts Board Chairman Robert M. Rosenberg.

The two companies said the total value of the transaction is about $325 million. The agreement is subject to Allied-Lyons’ acquisition of at least 75% of the outstanding shares. In connection with the execution of the merger agreement, Dunkin’ Donuts agreed to pay Allied-Lyons a $7 million termination fee under certain conditions.

Allied-Lyons, based in Britain, primarily owns and operates drink and food businesses. Its holdings include Baskin-Robbins franchised ice cream stores, Tetley Inc., DCA Food Industries and Hiram-Walker-Allied Vintners, the wine and spirits company which markets Kahlua, Ballantines, Courvoisier, Canadian Club and Tia Maria.

In September, Dunkin’ Donuts rejected a $45-per-share hostile takeover bid from DD Acquisitions of Toronto which valued the company at about $310 million.