Coffee Giant to Acquire Krispy Kreme for $1.3B

The investment arm of Germany's Reimann family adds doughnuts to a breakfast empire that also includes K-cup maker Keurig Green Mountain.
Katie Kuehner-HebertMay 9, 2016

Germany’s Reimann family is adding to its empire of breakfast products by acquiring doughnut maker Krispy Kreme for about $1.35 billion.

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. They are paying $21 per share for Krispy Kreme, a premium of about 25% over the closing price of $16.86 on Friday. 

The shares closed on Monday just short of the buyout price, at $20.96.

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According to Reuters, JAB has ambitions to build a global coffee powerhouse to rival market leader Nestle SA. Its other recent acquisitions include Einstein Brothers Bagels, 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,” Peter Harf, a senior partner at JAB, said in a news release. “This is yet another example of our commitment to investing in extraordinary brands with significant growth prospects.”

Krispy Kreme, which has more than 1,100 shops around the world, is best-known for its glazed doughnuts. But as The New York Times reports, “the company has been prioritizing coffee with new offerings and promotions, including National Coffee Day in September, when it gave out free coffee and doughnuts.”

Last month, it announced a new line of edible coffee treats in three Krispy Kreme flavors, including original glazed, caramel macchiato and cappuccino.

JAB’s portfolio of brands makes it the “near-ideal candidate” to control Krispy Kreme, Will Slabaugh, an analyst at Stephens, said in a research note, adding that it will be able to add food and beverage options and help Krispy Kreme expand nationally and internationally.

“I am confident the JAB team is the right partner with whom to continue building upon our incredible legacy,” Krispy Kreme Chairman Jim Morgan said.

The Reimann family are the heirs to the German consumer goods conglomerate Joh. A. Benckiser. Private equity firm BDT Capital Partners is investing alongside JAB and will hold a minority stake in Krispy Kreme.