An assortment of Krispy Kreme doughnuts in Decatur, Ala. Krispy Kreme is set to be acquired by private investment firm JAB Beech in a $1.35 billion deal.(Photo: John Godbey, AP)
Krispy Kreme Doughnuts woke up Monday to a glaze of cash.
The chain famous for its simple glazed yeast doughnut will be acquired by JAB Beech, a subsidiary of investment firm JAB Holdings Company, in a deal valued at $1.35 billion. JAB Beech will pay $21 a share in cash for Krispy Kreme, a 25% premium over the company's Friday closing stock price of $16.86. The company's more than 1,100 stores across the world will continue to be operated independently.
The deal will turn Krispy Kreme into a private company and is expected to close in the third quarter this year. It also values the doughnut shop at the same price as its initial public offering at $21 a share in April 2000. As the once-small company gained prominence, its stock reached a high of $49.37 in August 2003. It more recently plummeted to as low as $1.08 a share in February 2009. Shares have fallen roughly 2.4% in the past year.
Krispy Kreme's business has been fairly strong in recent years, with the fourth quarter of 2015 marking its seventh consecutive quarter of same-store sales growth at company-owned stores in the U.S. The majority of Krispy Kreme stores are operated by franchisees, where same-store sales also grew in the quarter ended Jan. 31.
As it has expanded abroad though, international franchise store sales have been weaker, falling 7.1% in the fourth quarter on a constant currency basis. Krispy Kreme has more stores overseas than in the U.S., and has had to weather headwinds from a strong dollar.
CEO Tony Thompson outlined the company's plans for growth in March, including continuing to open stores overseas, increasing brand awareness and updating the menu. He said in a company statement Monday that JAB will help Krispy Kreme grow its brand as it expands around the world.
The latest acquisition by JAB shows how much the firm has been targeting major breakfast and coffee brands at a time when breakfast is one of the few growth engines of the restaurant industry. JAB acquired Keurig Green Mountain in a $13.9 billion deal last year and has controlling stakes in other coffee companies including Peet's Coffee & Tea and Caribou Coffee.
