Sweet Deal? Krispy Kreme Is Being Acquired By German Conglomerate

May 9, 2016

A customer chooses a Krispy Kreme Doughnut from a shop in Tokyo, Japan.
Credit Leoneda Inge

A German conglomerate is buying Winston-Salem-based Krispy Kreme Doughnuts in a billion dollar deal that will take the company private.

JAB Holding Company is buying Krispy Kreme for about $1.35 billion. Several experts say it’s a sweet deal. The German conglomerate is paying $21 a share, a 25% premium over what Krispy Kreme was worth at market close on Friday.

"When you hear the word Krispy Kreme you know exactly what you’re talking about. You’re talking about doughnuts," said  Professor Ajay Patel, chair of finance at the Wake Forest University School of Business. "And so they’re not going to change the name, it doesn’t make any sense to do that.  They’re not going to change the product, the people like the product."

Patel says what the German company will be able to do is grow Krispy Kreme’s beverage business, which has been lagging. JAB Holding already owns Keurig Green Mountain and Caribou Coffee, and other coffee brands. The Keurig takeover went for $13.9 billion.

Taking the company private means Krispy Kreme will no longer be focused on analyst's expectations in the short run, Patel said.

"So, that will allow Krispy Kreme and or the German firm to actually make longer term investments or investments that take longer to pay off, and that should help Krispy Kreme," said Patel.

In a statement, Krispy Kreme CEO Tony Thompson said the company remains focused on "continuing to offer our premium, high-quality doughnuts and sweet treats to consumers around the world."

"I am confident the JAB team is the right partner with whom to continue building upon our incredible legacy," Thompson said.

Krispy Kreme, known for its "Original Glazed" doughnut, was founded in 1937.  The company has more than 1,100 shops in several dozen countries.