JAB Holding Company, a German conglomerate, has signed a deal with Krispy Kreme Doughnuts(NYSE:KKD) to acquire Krispy Kreme for $1.35 billion, according to a statement on Monday.
JAB Holding agrees to acquire Krispy Kreme for $21 per share in cash, a premium of over 25% from closing price on Friday. Krispy Kreme stocks increased 24% to $20.88 in early trading Monday, and the stock was already up 12% in the year. JAB will buy Krispy Kreme through its subsidiary JAB Beech. The deal will close in the third quarter, and after that, Krispy Kreme will be privately owned but the headquarters in Winston-Salem, N.C. will not move.
Krispy Kreme Doughnuts, an 80-year-old company, is famous for its yeast-raised, glazed doughnuts. The company introduced a new line of coffee blends in 2011, and it gradually added more kinds of coffee drinks to the menu in the following years. However, due to the competition in coffee market and strong competitors like Starbucks and Dunkin’ Brands, Krispy Kreme lagged in beverage business. After acquisition, JAB will help in boosting the sale of beverages.
JAB Holdings, owned by Reimann family, has built a coffee empire by owning Stumptown Coffee Roasters, Peet’s Coffee & Tea, Caribou Coffee and so on. The acquisition of Krispy Kreme is the second major coffee-related buyout following the acquisition of coffee maker Keurig Green Mountain Inc. in a $13.9 billion deal in December.
“We are thrilled to have such an iconic brand as Krispy Kreme joining the JAB portfolio,” said Peter Harf, senior partner at JAB Holding. “This is yet another example of our commitment to investing in extraordinary brands with significant growth prospects.”
Krispy Kreme will also benefit from the buyout. JAB Holding provides a good opportunity for Krispy Kreme in beverage business. In addition, the German conglomerate could also help in the sales of foreign markets. With $518.7 million in annual revenue, Krispy Kreme had good performance in domestic markets, while having a falling sales in the foreign markets in recent years.