JAB Holding Company, which has aggressively acquired coffee concepts in recent years, is now getting into doughnuts, after agreeing to acquire Krispy Kreme Doughnuts Inc. on Monday for $1.35 billion.
JAB Beech Inc, a JAB Holding subsidiary that owns Einstein Noah Restaurant Group, Caribou Coffee, Peet’s Coffee & Tea and Stumptown Roasters, has agreed to pay $21 per share in cash for the Winston-Salem, N.C.-based Krispy Kreme. That’s a 25-percent premium over the company’s closing price on May 6. Krispy Kreme’s stock was last above $21 a share in February last year.
Krispy Kreme will remain independently operated in Winston-Salem. The deal is still subject to regulatory and shareholder approvals and is expected to be closed in the third quarter.
[CHARTBEAT:3]
“For nearly 80 years, our iconic brand has been touching and enhancing lives through the joy that is Krispy Kreme,” Krispy Kreme Chairman Jim Morgan said in a statement. “This transaction puts us in the best possible position to continue to spread that joy to a growing number of people around the world while delivering significant value for Krispy Kreme shareholders.”
Krispy Kreme was a well-loved southern doughnut chain before it started expanding rapidly in the 1990s, generating long lines of customers in places like New York City for openings of massive doughnut shops. The company went public in 2000, but then struggled for years as sales declined, stores closed, earnings plunged and the company went through a public accounting scandal
But the chain has recovered in recent years under Morgan and CEO Tony Thompson. Entering Monday, the stock was up more than 11 percent this year. Revenues increased 5.8 percent last year to $518.7 million and systemwide store count grew 13.6 percent, though same-store sales in 2015 fell 3.9 percent in the US.
The chain has more than 1,100 locations around the world.
“JAB’s experience and industry knowledge make them the ideal partner to help grow the iconic Krispy Kreme brand throughout the world,” Thompson said in a statement. ‘We remain focused on our long-term strategy and continuing to offer our premium, high-quality doughnuts and sweet treats to consumers around the world.”
JAB, meanwhile, has been acquiring a flurry of companies in recent years. In addition to the aforementioned coffee chains, it recently acquired the single serve coffee maker Keurig Green Mountain.
BDT Capital Partners, a private equity group based in Chicago that specializes in buyouts, is a minority investor in the Krispy Kreme deal.
“We are thrilled to have such an iconic brand as Krispy Kreme joining the JAB portfolio,” Peter Harf, senior partner at JAB, said in a statement. “This is yet another example of our commitment to investing in extraordinary brands with significant growth prospects. We feel strongly that Krispy Kreme will benefit greatly from our long-term focus on support for management’s vision in building on the legacy of this exciting brand as an independent stand-alone entity.”
Contact Jonathan Maze at [email protected]
Follow him on Twitter at @jonathanmaze
