In taking Krispy Kreme private, company leaders are likely looking to make it easier for the chain to make long-term investments in the business without having to answer to shareholders looking for quick improvement.
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Krispy Kreme has more than 1,100 shops in more than 26 countries, including a handful in Canada. The holding company also has luxury shoe retailer Jimmy Choo, of which JAB senior partner Peter Harf is chairman, and Reckitt Benckiser, which has its own stable of consumer goods brands such as Lysol and Durex. The transaction may undervalue the Company and would result in a loss for many Krispy Kreme shareholders. And, perhaps most importantly, Krispy Kreme might be bumping up against the limits of a strategy that relies so heavily on its signature pastry. It also has controlling stakes in Peet’s Coffee, Espresso House, Baresso Coffee and the group behind Einstein’s Bagels.
The Reimanns will take Krispy Kreme private through their JAB investment vehicle just two months after completing the $13.9 billion acquisition of K-cup maker Keurig Green Mountain.
Arcus Capital Partners LLC acquired a new position in shares of Krispy Kreme Doughnuts during the fourth quarter valued at about $9,447,000.
Krispy Kreme’s Morgan said: “For almost 80 years, our iconic brand has been touching and enhancing lives through the joy that is Krispy Kreme”.
Krispy Kreme’s Board of Directors unanimously approved the agreement, which represents a premium of approximately 25% over the Company’s closing stock price on May 6, 2016.
The Dow Jones industrial average edged down 49 points, or 0.3 percent, to 17,691 as of 2:20 p.m.
The doughnut chain, which was founded in 1937, will remain privately-owned, and continue to operate out of its current headquarters in Winston-Salem, N.C., the company said in a press release.
The Nasdaq gained 14.05 (+0.30 percent) to finish at 4,750.21, while the S&P pushed up 1.55 (+0.08 percent) to close at 2,058.69. Nearly 90 percent of its revenue came from doughnuts past year. This is yet another example of our commitment to investing in extraordinary brands with significant growth prospects.
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Over the period of one year Krispy Kreme Doughnuts’s share price has increased by 0% moving from 0.00 to 20.92. The fourth quarter a year ago was the seventh straight quarter of growth for stores owned by the company, and a majority of the stores, which are franchised, also showed promising growth.
