Donut company Dunkin' shares pop in IPO

Dunkin' Brands, the parent of doughnut maker Dunkin' Donuts, traded above its IPO price Wednesday.

NEW YORK (CNNMoney) -- Dunkin' Brands made its debut as a public company Wednesday, with investors showing strong demand for the doughnut maker's initial public offering.

Shares of the parent company of Dunkin' Donuts and Baskin-Robbins started trading at $25 each, up 31% from the list price.

Dunkin' (DNKN) shares rose to a high of $27.70 in early trading on the Nasdaq.

The offering of over 22 million shares of common stock raised $423 million for the company. Dunkin' plans to use the IPO proceeds to pay down debt.

Dunkin' is majority-owned by a group of private equity investors including Bain Capital Partners, The Carlyle Group and Thomas H. Lee Partners. That group paid $2.4 billion for Dunkin' in a 2006 leveraged buyout, and retains about a 75% stake following the offering.

Stephanie Chang, an analyst at Greenwich, CT.-based IPO investment firm Renaissance Capital, said the offering was expected to do well.

"Dunkin is a well-known brand and a market leader with global reach," she said. Investors were also attracted to the company's "aggressive store expansion strategy," she added.

Dunkin' is well known in the Boston and New York regions, where the doughnut and ice cream franchise has expanded rapidly over the past few years. It currently has 6,799 locations in 36 U.S. states, and more than 3,000 stores abroad.

The company opened 200 new U.S. stores last year and plans to open another 200 to 250 locations this year. Its long-term goal is to operate 15,000 Dunkin' Donut franchises nationwide.

The company, whose stores are almost entirely franchise-owned, had total sales of about $7.6 billion last year, according to its prospectus.

In the first three months of 2011, Dunkin' and Baskin-Robbins franchises reported $1.8 billion in domestic and foreign sales, up slightly from last year.

Investors are betting the company's franchise model will help it continue expand rapidly, said Chang.

That's because franchisees pay most of the cost of setting up new Dunkin' Donuts or Baskin-Robbins locations. In addition, the company has little exposure to volatile commodity prices, since the store owners pay those costs too.

Despite the company's name, Dunkin' Donuts sells more coffee than fried dough.

In 2010, beverage sales made up 60% of total sales. The rest came from sales of baked goods, including doughnuts, bagels and sandwiches.

Dunkin's main competitors are McDonalds (MCD, Fortune 500) and Starbucks (SBUX, Fortune 500), which also sell coffee and baked goods. Its main rival in the doughnut business is Krispy Kreme (KKD).

The offering is the latest in a string of IPOs that have received a warm welcome from investors, including several unprofitable technology companies.

Chang said it's too soon to say how Dunkin' stock will perform after the IPO euphoria fades. But she added that investors have been nibbling on shares of other fast-food companies as the economic recovery slowly chugs along.

"The consumer space in general is an area where investors are showing a lot of interest," she said. "Hopefully that should sustain demand for the stock going forward." 

First Published: July 27, 2011: 11:01 AM ET

Quoting : CNN

Tesla shares pop on $100 million Toyota deal

NEW YORK (CNNMoney) -- Shares of Tesla Motor jumped nearly 5% on Wednesday after the company disclosed a $100 million deal with Toyota to provide parts for an electric version of the Rav4.

Tesla will provide an "electronic power train system" for Toyota's crossover SUV, which is expected to start production next year, according to a regulatory filing.

Shares of Tesla rose $1.30, or 4.6%, to $29.19 in afternoon trading. Toyota's stock was flat a $84.30 a share.

Under the agreement disclosed Wednesday, Tesla will supply Toyota with all the parts necessary to power an electric Rav4, including a battery, charging system, inverter, motor, gearbox and software.

Tesla (TSLA) will also provide certain services related to the company's battery and powertrain technology.

The Japanese auto giant announced plans to invest $50 million in the boutique electric carmaker last year as part of a partnership to develop new technology.

Toyota (TM) did not immediately respond to a request for comment.

The two automakers announced plans last year to produce an electric Rav4, but they had not previously disclosed the agreement's financial terms.

Tesla currently sells the Tesla Roadster, a two-seat electric sports car that goes for over $100,000. In 2012, the company plans to begin production of the Model S, an electric sedan capable of seating up to seven people. That car will be built at a Fremont, Calif., plant that had been jointly operated by Toyota and General Motors (GM, Fortune 500) prior to GM's bankruptcy.

Toyota used an earlier version of the Rav4 as an electric vehicle in the 1990s during a time that California required automakers to sell vehicles with engines that produced zero emissions. That electric Rav4 competed against GM's EV1 electric car.

Some of those electric Rav4s are still in operation, including several that Toyota uses at its Newark, N.J., port facilities.

Toyota, which is already the industry sales leader in gas-electric hybrid cars, is also looking for other partners to develop future alternative fuel technologies. In fact, executives have said they expect collaboration with other companies to be a key part of Toyota's alternative fuel strategy.

Toyota executives have, in the past, expressed doubts about the market potential for purely electric cars. They cited the vehicles' high cost, relatively short driving distance, long charging times and questionable battery technology.

Last year, Toyota revealed a concept version of a tiny electric "city car" with a 40-mile range. That car was under development, Toyota said at the time, and intended primarily for short-term rental use within cities.

Toyota plans to introduce a plug-in version of the Toyota Prius hybrid in 2011, but that vehicle would still use a gasoline engine as its primary power source.

-- CNNMoney senior writer Peter Valdes-Dapena contributed to this report.  

Quoting : CNN