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Time to Break the Donuts?

NEW YORK -- Pernod SA, the French distiller that is buying the British parent of Dunkin' Donuts, Baskin-Robbins ice cream and Togo's sandwich shops, said it has a long list of suitors for the restaurant chains, according to the Boston Globe.

Pernod, which is not in the restaurant business, is buying Allied Domecq PLC along with U.S. consumer products company Fortune Brands Inc. in a $14.2 billion deal to bolster its portfolio of liquor brands and more effectively compete against its largest rival, Diageo PLC.

Pierre Pringuet, Pernod's joint managing director, said the company plans to sell the Canton restaurant business, Dunkin' Brands Inc., once its acquisition of Allied is complete sometime this summer because it wants to keep its focus entirely on liquor and spirits.

''It's a strategic decision," he said. ''It's not at all because we think the business is bad. We know there is growth and profit."

Pringuet said he expects the three restaurants will most likely be sold together and they will likely sell quickly. He said the three restaurants have attracted both private equity and strategic buyers but declined to name them.

Nigel Popham, an analyst with British brokerage Teather & Greenwood, has estimated the restaurants to be worth nearly $2.3 billion. Pernod plans to sell the company through an auction, inviting interested parties to submit bids and selling to the highest bidder.

Charles Collier, chief executive of Boston strategic marketing firm Mount Vernon Strategies, said private equity investors are certainly interested in Dunkin' Brands, especially the company's crown jewel, Dunkin' Donuts.

But with Dunkin' Donuts in many Northeast cities and entrenched competitors from Starbucks Corp. to regional mom-and-pop shops in other regions, investors are wondering if there is enough growth left to merit the investment. If a private equity firm were to buy Dunkin' Brands for $2.3 billion, Collier said, it would want to sell it for a minimum of $5 billion down the road.

Collier said there may be more value in Baskin-Robbins and Togo's. Though the chain's sales are a fraction of Dunkin's and their growth in recent years has been disappointing, with the proper attention, Collier said, they could potentially offer a bigger return than Dunkin'.

''There's tremendous interest, but right now, people are waiting on the sidelines and seeing who jumps in," Collier said.
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