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DealBook: Groupon Shares Jump 40%, to Open at $28

November 4, 2011 by Leave a Comment

Andrew Mason, chief of Groupon, with his fiancee, Jenny Gillespie, a pop musician.Brendan Mcdermid/ReutersAndrew Mason, chief of Groupon, with his fiancee, Jenny Gillespie, a pop musician.

Groupon — an Internet darling with no profits but plenty of momentum — stunned Wall Street on Friday with a premiere that echoed the dot-com boom.

After it started trading on the Nasdaq market around 10:45 a.m., the three-year-old daily deals site, which sold its shares at $20, promptly soared 40 percent to open at $28, continuing to climb to more than $30. At that latest price, Groupon is valued at nearly $19 billion.

The dearth of shares helped buffer the price. The company sold just 35 million shares in the initial public offering, roughly 5 percent of the total. The underwriters also have the option to sell an additional 4.5 million shares.

The $700 million offering — the second largest for a technology company this year — did not eclipse the 1995 I.P.O. of the web browser Netscape, the offering that launched a thousand I.P.O.’s. But the pop was enough to quiet the fears of technology investors who have recently wondered whether the I.P.O. market was open at all. Demand for Groupon’s shares was so high, that orders were more than 10 times the amount of the shares offered, according to several people with knowledge of the matter.

“Groupon’s I.P.O. certainly helps the U.S. market for technology offerings,” Josef Schuster, a money manager at IPOX Schuster, “It indicates that people are willing to take risk again.”

Many investors are already looking ahead, eager to see if the valuations will stick and other technology start-ups will find the public markets equally hospitable.

The gaming company Zynga filed to go public back in July and is expected to start trading by the end of this year. LinkedIn, which had a successful debut in May, with shares more doubling on the first day of trading, will also test the market’s appetite by selling even more shares. Late Thursday, the professional social network said it was planning to offer up to $500 million in additional shares.

The latest batch of I.P.O.’s are expected to pale next to the highly anticipated I.P.O. of Facebook. The world’s largest social network is widely expected to go public sometime next year at a valuation of $80 billion or more.

Article source: http://feeds.nytimes.com/click.phdo?i=54f75b769857dae432ae9f16c4768074

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DealBook: Sweet Debut for Dunkin’ Brands

July 27, 2011 by Leave a Comment

Glazed donuts for sale at a Dunkin' Donuts store in West Orange, N.J.Emile Wamsteker/Bloomberg NewsGlazed doughnuts for sale at a Dunkin’ Donuts store.

4:23 p.m. | Updated

The Dunkin’ Brands Group, owner of the Dunkin’ Donuts and Baskin Robbins chains, got a warm reception from investors in its market debut on Wednesday, one of the busiest weeks for public offerings since the financial crisis.

Shares of the company, which were priced at $19 for the offering, opened at $25 and continued to rise, closing up 46.6 percent at $27.85.

At that level, Dunkin’ Brands, which trades on the Nasdaq market under the ticker symbol DNKN, is valued at about $3.5 billion. (Starbucks, in comparison, has a market value of nearly $29.5 billion; Krispy Kreme Doughnuts — a hot I.P.O. in 2000 — has a market value of $570 million.)

In its much-anticipated offering, Dunkin’ Brands sold 22.25 million shares, raising $422.75 million. The underwriters have the option to sell an additional 3.34 million shares, allowing the company to bring in as much as $486.16 million.

It has been an active week for the I.P.O. market. Three companies have priced their offerings, including Dunkin’ Brands. Another seven are set to do so this week, according to Renaissance Capital, an I.P.O. advisory firm, including two more retail companies — Teavana and the Chefs’ Warehouse.

Nasdaq was keen to celebrate the Dunkin’ I.P.O., saying that it was “unofficially changing its name to Nasddaq, incorporating Dunkin’ Donuts’ iconic pink and orange D’s into our traditional logo,” according to Bruce Aust, executive vice president of Nasdaq’s corporate clients group.

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Dunkin’ Brands — owned by a consortium of buyout firms, including Bain Capital Partners, the Carlyle Group and THL Partners — is also the latest company backed by private equity to go public this year. Among the earlier I.P.O.’s: Freescale Semiconductor Holdings, the chip maker; the hospital operator HCA; and Nielsen Holdings, the consumer ratings company.

Like many of its private-equity-owned peers, Dunkin’ Brands plans to use the proceeds of its offering to help reduce debt. As of March 26, the company’s debt load stood at $1.89 billion, according to a recent filing.

Over all, Dunkin’ Brands earned $26.9 million last year on revenue of $577.1 million, nearly all from franchising.

Investors in Dunkin’ Brands, in part, are betting on the growth opportunity. Dunkin’ Donuts is mainly concentrated in the eastern United States. In New York and New England, the chain has roughly one location for every 9,700 people.

The company plans to focus its expansion efforts in underpenetrated areas east of the Mississippi River and make “disciplined” moves into the rest of the country. Currently, there is one store for every 1.19 million people in the western United States.

“It’s an expansion story,” said Paul Bard, vice president of research at Renaissance Capital. “The company says it can double the numbers of stores in the United States. You can’t say the same for McDonalds.”

The company’s growth, though, depends more on cappuccinos, Coolattas and coffee than cream-filled doughnuts. In 2010, beverages and coffee beans accounted for 60 percent of sales at the Dunkin’ Donuts chain.

There are 14 underwriters involved in the Dunkin’ Brands I.P.O., including JPMorgan Chase, Barclays Capital, Morgan Stanley, Bank of America Merrill Lynch and Goldman Sachs.

Article source: http://feeds.nytimes.com/click.phdo?i=b0582abefabf4e2d2e2bb1ec6a566b26

Filed Under: Business News Tagged With: , ,