Winston-Salem-based Krispy Kreme agreed to be taken over by JAB Beech, Inc. in a $1.35 billion dollar acquistion Monday. According to a press release from the company, Krispy Kreme will become a privately owned company that will continue independent operations at its current headquarters in Winston-Salem.
This is the latest deal for JAB, which also owns Keurig, Peet's Coffee & Tea, Stumptown Coffee Roasters and Caribou Coffee.
“We are thrilled to have such an iconic brand as Krispy Kreme joining the JAB portfolio. 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 and support for management's vision in building on the legacy of this exciting brand as an independent standalone entity.”
Ajay Patel is a professor at the Wake Forest University School of Business. He says the coffee market has been growing and Krispy Kreme wants to get in.
"Now, Krispy Kreme has no interest in being a Starbucks – they know they're a doughnut shop," he says. "But when people come in for doughnuts they'd like to be able to sell them beverages."
Patel says because JAB is buying an iconic brand of doughnuts, they are unlikely to make significant changes to the glazed treat.
Krispy Kreme was founded in Winston-Salem in the 1930s and went public in 2000.
Amy Joyner Buchannan cowrote the book “Making Dough” about the success of Krispy Kreme. She says the company saw explosive growth by putting a spotlight on its original glazed doughnuts and coffee. She says now might be a time to return to that kind of focus.
“Since going public they've added blended drinks, and bagels and ice cream, and I don't know if that specialness is there anymore,” she says.
In March, Krispy Kreme projected weak growth. Fortune reports that the company said their fast-growing international stores contributed to low-sales.
Tony Thompson, CEO of Krispy Kreme, commented, “JAB's experience and industry knowledge make them the ideal partner to help grow the iconic Krispy Kreme brand throughout the world. 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 will acquire Krispy Kreme for $21 per share in cash. The deals represents a premium of approximately 25% over the company's closing stock price on Friday, May 6.
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