Shares of Dunkin Donuts’ (NASDAQ:DNKN) parent company, Dunkin Brands Group Inc., has just hit a new all-time high.
The stock soared as Wall Street reacted to the possibility of a takeover after Coca Cola recently announced it would be acquiring Costa Coffee. The acquisition is the biggest in all of Coca Cola’s history.
Although Dunkin had long been considered a takeover prospect for JAB Holding, it could be Coca Cola that may be a new buy out candidate. At least this is according to Gordon Haskett analyst Don Bilson.
The analyst wrote in a research note that JAB has been steadily creating a coffee and breakfast empire over the last five years, and Dunkin’ would fit well in the company’s portfolio. According to Bilson, if Coca Cola were to continue to build its portfolio, Dunkin’ would be an attractive candidate. With a market cap of $6.3 billion, Dunkin’ would be a much more expensive target than Costa.
“Assuming this move goes well, we see one beneficiary being Dunkin Brands (DNKN) which has long been thought of as a target for [JAB Holdings] and now profiles as a prospect for KO as well,” Bilson wrote.
“Of course, (NASDAQ:DNKN) is breaking in a new CEO at the moment and we assumed back in July when this move was finalized that DNKN was planning on remaining independent, at least for a while. We aren’t in any rush to amend that thought but KO’s purchase does up the ante in the coffee wars and as we see it, DNKN is now a strategic asset that JAB and KO both may want.”
Dunkin’ spokeswoman Michelle King declined to comment on the stock’s move and stated, “We do not comment on rumor or speculation.”
“We assumed back in July when this move was finalized that Dunkin’ was planning on remaining independent, at least for a while,” Haskett wrote. “We aren’t in any rush to amend that thought, but Coke’s purchase does up the ante in the coffee wars and as we see it, Dunkin’ is now a strategic asset that JAB and Coke both may want.”
“I certainly get the sense that people have looked at it and done a lot of homework on Dunkin’,” remarked R.J. Hottovy, who is the senior retail and restaurant analyst at Morningstar. “The Costa acquisition last week has people thinking about this again, because deals are taking place in the space.”
Last month analysts at Citigroup had raised their price target on the stock from $80.00 to $83.00 with a “buy” rating.
Since the beginning of the year, Dunkin shares are up over 16%.