Who owns Krispy Kreme? From the doughnut company’s near bankruptcy to its successful revival

Krispy Kreme

Founded by Vernon Rudolph in 1934, Krispy Kreme doughnuts stood the test of time for numerous decades that is until the new century came along. As the company indulged in excessive expansion, the once novelty doughnuts became ubiquitous and in turn, it lost a part of its charm and its customers along the way.

However, things are now looking good for Krispy Kreme, Inc. after it decided to come back with its original brand of freshly produced doughnuts that resonates with the loyal customers. Well, despite its highs and lows, no one can deny that the company’s 88-year run is an impressive feat.

Key Takeaways

  • After filing for an IPO in May 2021, Krispy Kreme, Inc. is currently a publicly owned company.
  • Michael Tattersfield is the chief executive and president of Krispy Kreme and has been holding the position since January 2017.
  • Krispy Kreme’s first public venture in 2000 was a failure and resulted in the bankruptcy of some of its franchises, eventually leading to its private acquisition.
  • In May 2016, JAB Holding Company acquired the company for $1.35 billion and the company remained private for five years.

Krispy Kreme, Inc. is a publicly owned company after it filed for an Initial Public Offering (IPO) in May 2021

On 4th May 2021, CNBC reported that Krispy Kreme was returning to the stock market five years after it was privately acquired by JAB Holding in 2016.

The company listed its initial public offering (IPO) under Nasdaq Stock Exchange in June under the stock symbol “DNUT”. As per its registration statement, the IPO was set to occur after its review process was completed by the Securities and Exchange Commission (SEC) of the United States.

According to The Winston-Salem Journal, influential financial institutions such as JPMorgan Chase & Co., Bank of America Securities, Citigroup, and Morgan Stanley served as lead managers of the IPO. Moreover, some of the other participating firms included Goldman Sachs & Co. LLC, Truist Securities, and Wells Fargo Securities.

On July 1, 2021, Krispy Kreme went public on the Nasdaq Stock Market for $16.3 per share and was valued at $2.62 billion. Fox Business reports that at the closing session of the IPO, the shares were valued at $21 apiece, which was a 23 percent increment from the debut value of the shares.

Nonetheless, according to Nasdaq, JAB Holding remains the company’s largest shareholder with its ownership of 43 percent of the outstanding shares. It is followed by BDT Capital Partners, LLC at 8.6 percent and Michael Tattersfield (member of the board and CEO) at 1.9 percent as the second and third largest shareholders respectively.

Similarly, CNN Business reports that other significant stockholders include The Vanguard Group, Inc. which owns the largest stake in Krispy Kreme at 1.72 percent, followed by Stanford Management Co. and the University of Pennsylvania (Investment).

The president and CEO of Krispy Kreme, Michael Tattersfield, remained optimistic about the company’s prospect after going public

Providing an insight into the company’s decision to go public once again, Michael J. Tattersfield, who has been serving as the CEO and president of Krispy Kreme since January 2017 told Yahoo Finance;

“We’ve been a public company once before. And we’re now again. And we’re able to do that again because we’ve transformed the business. We’ve focused on a brand, focused on our culture, and really changed our business model.”

The President and CEO of Krispy Kreme, Michael Tattersfield | Photo by Mark Lennihan/AP

In the five years that the company was private, it learned from its previous error of over-expansion and instead focused on the business model of rebranding itself as the producer of fresh doughnuts and endeavored towards recapturing its original reputation.

“So that focus on the business model following where the customers are, we were able to double the revenue and double the EBITDA, we acquired the business a little over a billion dollars and where we are today, it’s 2 and 1/2 times the value that’s been generated,” Tattersfield elaborated.

Krispy Kreme’s growth as a result of brand transformation reignited the faith of investors in the company’s potential as a global brand. Thus, sensing that the time was right, the executives decided to set it up for a public offering.

In an interview on The Claman Countdown on Fox Business, Tattersfield said that they were in it for the “long journey, the journey that [they have] done over the past five years”.

“You can see the growth there. And it’s a really high-quality investor base that’s with us. And they see the potential in the US as well as the globe,”

Krispy Kreme’s unsuccessful first public venture in the early 2000s paved the way for its private acquisition in 2016

Krispy Kreme’s rather unsuccessful first public venture on the New York Stock Exchange in 2000 is well-documented. Though it initially witnessed huge success as a public company to the extent of its share prices increasing by 235 percent in three years, its popularity and growth were fleeting.

According to CFO Magazine, the company experienced its first loss as a public company in May 2004, with share prices dropping by 37 percent, just months after having an efficacious previous fiscal year. With rumors of bankruptcy and accusations of channel stuffing (sales inflation), the company’s downward spiral was apparent.

While experts held Krispy Kreme’s rapid expansion to blame for its dwindling, The Los Angeles Times reported that the then CEO Scott Livengood attributed the company’s loss to the low-carb dieting trend of the early 2000s much to the skepticism of the analysts.

“This is not an excuse. It’s what it is. What is important now is what we are going to do about it. We are taking it extremely seriously,” insisted Livengood when his claims were questioned in a conference call with analysts.

In January 2005, Stephen Cooper, the interim CEO of Enron Corp, replaced Livengood as CEO as the company faced federal investigations for questionable accounting practices and numerous lawsuits from shareholders.

Furthermore, on March 4, 2009, the Securities and Exchange Commission (SEC) of the United States sent a cease-and-desist letter to Krispy Kreme for fraudulent inflation and misrepresentation of its earnings between February 2003 and May 2004.

JAB Holding Company privately acquired Krispy Kreme in May 2016 for $1.35 billion and governed it for five years

Following the bankruptcy of some of its franchises and low sales over the years, according to the Business Wire, the company was acquired by JAB Holding Company, a German investment conglomerate, for $21 per share that totaled to an equity value of $1.35 billion on May 6, 2016.

Tony Thompson, the presiding CEO of Krispy Kreme at the time, commented that JAB Holding was the “ideal partner to help grow the iconic Krispy Kreme brand throughout the world” for their experience and industry knowledge.

“We remain focused on our long-term strategy and continue to offer our premium, high-quality doughnuts and sweet treats to consumers around the world. We look forward to working with JAB to continue bringing the joy that is Krispy Kreme to a growing number of customers,” said Thompson.

Likewise, Peter Harf, who is now the chairman of JAB Holding, said that they were thrilled to have Krispy Kreme as a part of their portfolio. He further remarked;

“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.”

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