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Krispy Kreme gets sweet 25% premium to go private

Monday, May 09, 2016 - 01:28

Shareholders of U.S. donut chain Krispy Kreme got a hefty 25 percent bump in the stock after Germany's JAB announced plans to take the company private in a $1.35 billion deal. Bobbi Rebell reports.

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Germany's JAB betting on a coffee and donuts combo to percolate more interest in consumers. The company is paying $1.35 billion to take U.S. donut chain Krispy Kreme private, sending shares surging on Monday. The 25 percent premium is sweet but it actually pales in comparison to the 78 percent premium JAB paid when it bought K-cup pod maker Keurig Green Mountain earlier this year. JAB also owns Peet's Coffee and Tea. Tony Brenner of Roth Capital Partners says the company's fundamental outlook is attractive but adds that "While Krispy Kreme benefits from its iconic image as it moves into new markets, there is no assurance that it will retain that unique perception over the longer term." Reuters Lauren Hirsch says the company also faces broader challenges: (SOUNDBITE) LAUREN HIRSCH, DEALS TEAM LEADER, REUTERS (ENGLISH) SAYING: "The general trend for Americans and kind of worldwide is to kind of be a bit healthier. They are not necessarily on the healthy trend. A lot of these companies have also seen the fast casual restaurants of the world or Starbucks kind of eat into their market share." But she adds that JAB's international reach will help the company, which now has 824 outlets outside the United States. The news a relief to shareholders. After opening too many American stores too quickly about a decade ago, and in part due to some accounting issues, its stock crashed losing almost 90 percent of its value. Krispy Kreme will still operate independently and keep its headquarters in North Carolina.

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Krispy Kreme gets sweet 25% premium to go private

Monday, May 09, 2016 - 01:28