Investors are speculating that Krispy Kreme owner could try to acquire Dunkin' Brands

  • Rumors surfaced Monday that JAB Holding expressed interest in acquiring Dunkin' Brands.
  • JAB has been steadily building a coffee and breakfast empire over the last five years.
  • JAB most recently acquired Panera Bread in a deal valued at about $7.5 billion in April.

Investors are speculating that JAB Holding could be looking to scoop up another major company — Dunkin' Brands.

Shares of the coffee and donut company jumped nearly 8 percent on Monday on market speculation that JAB may be interested in acquiring the brand. On Tuesday, the stock was up 1.6 percent.

"While this isn't the first time a deal has been speculated between the two companies, the market reaction appeared to imply more credibility this time around," Jeremy Scott, senior research analyst at Mizuho Securities, wrote in a research note Monday. "JAB has been an aggressive acquirer over the past three years, paying substantial premiums for coffee and bakery brands in both retail and restaurants."

JAB, a privately held company headquartered in Luxembourg, may not be a household name but its brands are. The company owns Keurig Green Mountain, Krispy Kreme Doughnuts and acquired Panera Bread in a deal valued at about $7.5 billion in April.

"Buying Dunkin' would give JAB an enviable position in the coffee and snack space," Neil Saunders, managing director of GlobalData, told CNBC via email. "The deal would certainly create a whole host of synergistic cost savings and new sales opportunities."

"However, Dunkin' would be a very expensive buy for JAB and it is far from clear that the synergies would pay for such an extravagant purchase," Saunders said. "Moreover, while Dunkin' is a solid business, due to its saturation in the U.S., its growth opportunities mostly come from expanding into third-party channels like supermarkets. This means there are not a lot of growth vectors for JAB to exploit."

Representatives from Dunkin' and JAB declined to comment on the speculation.

JAB has been selling off several of its luxury brands in order to focus on faster-growing consumer sectors. On Monday, the company announced the sale of its Belstaff fashion brand to Ineos and in July it sold shoe company Jimmy Choo for $1.2 billion to Michael Kors.

"While the closure of these transactions reflects the completion of previously announced
plans, investors may be considering it a smoke signal that the company is primed to bid again," Scott wrote.

And Dunkin' would fit well in the company's portfolio. JAB has been steadily creating a coffee and breakfast empire over the last five years.

The company began building that position in 2012 when it took a stake in D.E. Master Blenders. The company told Bloomberg then that it had no plans to purchase the Amsterdam-based coffee company.

But later that year, it bought Peet's Coffee & Tea for $974 million and Minnesota-based Caribou Coffee for $340 million. In the years that followed, JAB would go on to spend billions expanding its coffee empire.

Eventually in 2013, JAB agreed to pay $9.8 billion to purchase D.E. Master Blenders.

That company became Jacobs Douwe Egberts when JAB merged it with the coffee division of Mondelez International in 2015, which it bought for around $4 billion.

JAB in 2014 scooped up Einstein Bagels' parent company, Espresso House and Baresso Coffee.

In 2015, JAB purchased Keurig Green Mountain for $14 billion and coffee roaster and retailer Stumptown Coffee and coffee bar chain Intelligentsia coffee. The next year, Krispy Kreme was added to the portfolio.

"While not completely clear if JAB Holdings would be interested in making additional investments in the restaurants space, the historical pattern suggests additional transactions are possible," David Tarantino, senior research analyst at Baird, wrote in a research note Monday.

"We would hesitate to assign a high probability to [Dunkin'] being acquired, but we suspect [Dunkin'] could represent an appealing acquisition target for JAB at some stage given the brand's strong position in the growing U.S. coffee category and the opportunity for continued global growth via an asset-light business model," he said.

Dunkin' has been pressured by competitors like McDonald's and Burger King to make itself known for more than just its donuts. The brand recently said it is contemplating changing its name to just "Dunkin'" to show that the company was a "beverage-led brand and coffee leader."

It will also begin to streamlining its menu, which has grown to include numerous breakfast sandwiches and sides, to make the stores "less complicated to operate," Dunkin' CEO Nigel Travis said on CNBC's "Closing Bell" last week.

The decision came after the company reported an unexpected fall in same-store sales at Baskin-Robbins during the third quarter, which weighed on Dunkin's overall profit for the quarter.

Same-store sales for Dunkin' Donuts, which make up about 70 percent of the brand's overall sales, also missed analyst expectations, but were slightly positive for the quarter.

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