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Dunkin’ Brands Considers Sale to Private Equity



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ImageA deal to take the parent company of Dunkin’ private could be announced as soon as today.
Credit…Mario Anzuoni/Reuters

DealBook’s Lauren Hirsch broke the news yesterday: Dunkin’ Brands is close to a $8.8 billion deal to sell itself to Inspire Brands, the restaurant operator backed by the investment firm Roark Capital. A deal could be announced as soon as today, sources say. Here’s everything you need to know about the scoop (or SC🍩🍩P, if you will).

Dunkin’ has done well during a pandemic. The chain was investing in its digital business before the coronavirus outbreak, helping it offer contact-free takeout. Shifting work patterns mean more people are coming in later in the day, boosting premium products like espresso and specialty beverages, which diners may have bought from smaller, independent coffee shops before. (Drinks make up more than half of Dunkin’s revenue, and it dropped “Donut” from its name last year.)

  • Bankers have long considered the company, whose 21,000 Dunkin’ and Baskin Robbins outlets are all franchised, a takeover target. Some saw a potential buyer in JAB, the European investment firm that owns Krispy Kreme, Panera and a host of coffee chains.

  • Dunkin’s C.E.O., Dave Hoffman, stands to make $10.8 million if there is a change in control this year, $1 million more than last year, according to filings. Pent-up demand for deals led to a big jump in M.&A. transactions in the third quarter, and a Dunkin’ takeover could inspire other private equity firms to jump into the fray for pandemic-proof targets.

It would be a jewel in Inspire Brands’ portfolio. The Roark-backed conglomerate has been on a buying spree in recent years, acquiring chains like Arby’s, Buffalo Wild Wings and Jimmy Johns. Inspire’s strategy is to improve companies’ digital operations while keeping their brands separate. (Its C.E.O., Paul Brown, has said he wants to organize the company like Hilton Hotels, where he once worked.) Owning a dominant chain like Dunkin’ could be the final touch Inspire needs before going public, as some expect — though Inspire has never confirmed such plans.

  • Dunkin’ has been private before. It was owned by a consortium of private equity firms, led by Bain Capital, Carlyle Group and Thomas H. Lee Partners, who acquired it from Pernod Ricard in a $2.4 billion deal in 2005. The firms took it public six years later.

The deal isn’t cheap, with Inspire offering a roughly 20 percent premium to Dunkin’s closing price on Friday, which was already near an all-time high. The availability of cheap debt and steady cash flow from the company’s franchises should make it easy to finance, Lauren hears.

Here’s what $8.8 billion could buy at Dunkin’:

  • 12 billion doughnuts

  • 49 billion Munchkins

  • 4.7 billion medium coffees

  • 2.5 billion bacon, egg and cheese bagels

  • 4.4 billion scoops of ice cream (3.5 billion with a waffle cone)

And a reminder: Dunkin’ isn’t just a place for coffee and doughnuts — it’s also a place to fall in love.

Today’s DealBook newsletter was written by Andrew Ross Sorkin and Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

Judge Amy Coney Barrett is poised to win confirmation to the Supreme Court. Senate Republicans voted last night to send her nomination to a final floor vote, which is scheduled for this afternoon, over Democratic objections. Only one of 53 Republicans in the chamber, Susan Collins of Maine, is expected to vote against.

New coronavirus outbreak strikes the White House. At least five aides to Vice President Mike Pence have tested positive for the virus, though Mr. Pence himself has not. The White House chief of staff, Mark Meadows, told CNN, “We’re not going to control the pandemic.” Separately, European countries imposed new restrictions amid a second wave of infections.

Facebook prepares for election-related unrest in the U.S. The social network is considering restrictions that slow the spread of some posts and lower the threshold for blocking inflammatory content, The Wall Street Journal reports. Such measures are normally reserved for what the company calls at-risk countries, like Sri Lanka and Myanmar.

European cities are reclaiming housing from Airbnb. Lisbon is among the cities using the pandemic to take back empty apartments normally run as tourist rentals, The Times’s Raphael Minder and Geneva Abdul report. The move could hurt Airbnb as it prepares to go public.

Anna Wintour faces scrutiny over diversity at Vogue. She has been criticized by current and former employees for overseeing a workplace “that sidelined and tokenized women of color, especially Black women,” The Times’s Ed Lee writes. The issue has gained prominence as Condé Nast, Vogue’s publisher, confronts accusations of racial inequality.

Guitar Center, the largest musical instrument retailer in the U.S., has begun preparations for a potential bankruptcy filing, DealBook scooped on Friday. But music, like many other hobbies, is booming during the pandemic. What gives?

Sign of the times. Fender, Taylor and other guitar makers have reported record sales, with music and other indoor pastimes getting a bounce in recent months. But the pandemic has highlighted that how a company sells is as important as what it offers, especially for retailers relying on brick-and-mortar stores. Even before the pandemic, Guitar Center was losing to online-only rivals like Sweetwater and direct sales from instrument makers; the same goes for craft stores like Joann Fabric and Etsy, or — let’s be frank — just about every offline retailer and Amazon.

  • Guitar Center, which traces its roots to 1959, skirted bankruptcy in April with a distressed debt exchange, and it may find another way to avoid Chapter 11. It is owned by the private equity firm Ares Management, which took a controlling stake in 2014 by converting debt into equity. Bain Capital acquired the chain in a leveraged buyout in 2007.

More than a third of the S&P 500 reports earnings this week. Companies have soundly beat (lowered) expectations thus far.

The tech giants are expected to rake in cash, with Microsoft reporting on Tuesday and Alphabet, Amazon, Apple and Facebook on Thursday. On Wednesday, the C.E.O.s of Alphabet, Facebook and Twitter are to testify before the Senate Commerce Committee on “transparency and accountability.”

In finance, HSBC reports on Tuesday; Blackstone, Deutsche Bank, Mastercard and Visa on Wednesday; Credit Suisse on Thursday; and KKR on Friday

Pharmaceutical firms providing coronavirus treatment updates along with earnings include Merck, Novartis and Pfizer on Tuesday; Amgen and GlaxoSmithKline on Wednesday; and Moderna and Sanofi on Thursday.

Updates from heavy industry come from BP and Caterpillar on Tuesday; Boeing, Ford and G.E. on Wednesday; Shell and Volkswagen on Thursday; and ExxonMobil on Friday.

But the biggest number of the week is the release on Thursday of third-quarter U.S. G.D.P., the last major economic data point before the election. It’s expected to show a record-breaking 30 percent annualized surge, but since it follows a collapse of roughly the same magnitude in the previous quarter, the economy will still be down from where it was at the start of the pandemic.

This week, DealBook will highlight how Corporate America is preparing for a momentous election. Today, a P.R. power player tells Ephrat Livni how anxiety about the pandemic and the election inspired a mindful business opportunity.

The election is amplifying anxiety in an already harrowing year of forced separation in a pandemic. “It’s been hard, and I think we all miss humankind,” said Jolie Hunt, the founder the marketing and communications firm Hunt & Gather.

Ms. Hunt has found happiness in hiking. After months of feeling overwhelmed by business, personal and worldly concerns, she turned to it as a solution by inviting several high-powered friends to join her for “Hike & Gather,” curated slumber parties at her home in upstate New York, with the spiritual benefits of an ashram (vegan meals, tarot readings and acupuncture) and the physical benefits of a boot camp (the hiking). Both dates offered, shortly before and after the election, were immediately overbooked.

“I’m going to need a break postelection,” said Joanna Coles, the former chief content officer at Hearst who is currently producing “The Bold Type,” a TV show inspired by her career as editor in chief at Cosmopolitan. She said she fell in love with Ms. Hunt at first lunch — a 2016 Vox Media event the P.R. pro devised, with helicopters flying attendees from Las Vegas to an “inaccessible ledge” in the Grand Canyon with a beautifully laid table and a guitar serenade that lasted exactly one hour. “I thought, ‘I must have this woman in my life,’” Ms. Coles recalls.

The Rev. Maryetta Anschutz, the founder of the Episcopal School of Los Angeles and a former associate dean of Yale Divinity School, said she was looking for connection, perspective and hope, whatever the election results. She trusts Ms. Hunt’s gathering instincts: “Pre-Covid she’d put together a dinner party anyone in the world would want to attend because everyone’s genuinely interesting.”

“It’s not glamping or overly ritzy,” insisted Alexa Christon, the chief marketing officer of Pearson, the educational publisher. The first event, about a week ago, began with a “beautiful” three-hour, rain-soaked march, she said. “Work, Covid, kids, politics, society — we’re used to being consumed by these things, and there’s a weight to that,” she added. After the retreat, however, she said she felt something deeper than the aches and blisters: “I felt me, the weight of me, my being.”


  • ByteDance is reportedly in talks to list Douyin, the Chinese counterpart to TikTok, in Hong Kong. (Reuters)

  • Carlyle is near a deal to buy a mechanical gears division of Siemens for $2.4 billion. (Bloomberg)

  • Blackstone plans to buy Simply Self Storage from Brookfield Asset Management for about $1.2 billion. (WSJ)

Politics and policy

  • Investigations into a $765 million government loan to Kodak reveal stumbles at a new U.S. agency directed with steering industrial policy. (NYT)

  • Some U.S. states are taxing people who briefly worked there during the pandemic on their full 2020 income. (Reset Work)

  • The Trump administration scrapped a plan to offer Santa Claus performers early access to coronavirus treatments in exchange for promoting a vaccine. (WSJ)


  • An $8 billion iPhone search deal underpins the Justice Department’s antitrust lawsuit against Google. Losing it would be “terrifying” to the company, former executives say. (NYT)

  • Lee Kun-hee, who built Samsung into a global technology giant, died yesterday. He was 78. (NYT)

  • Will Disney+ convert millions of viewers to subscribers when their one-year free trials end? (Bloomberg Businessweek)

Best of the rest

  • How The Epoch Times went from a small anti-China newspaper to a giant purveyor of right-wing misinformation. (NYT)

  • Is it time to restart buybacks? (Bloomberg Opinion)

  • A couple who ordered an $18 bottle of wine instead got a $2,000 bottle of Mouton Rothschild meant for a nearby table. (Decanter)

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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