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Why is Krispy Kreme Stock (KKD) Soaring 24% This Morning?

Shares of America’s favorite name brand doughnuts, Krispy Kreme Doughnuts, Inc. (KKD), are up over 24% during morning trading due to reports of the doughnut company being purchased by an indirect controlled subsidiary of JAB Holding Company.

 

Krispy Kreme Doughnuts and JAB Beech Inc. – BDT Capital Partners is also a minority investor alongside JAB – today announced that the companies have entered into a definitive merger agreement under which JAB Beech will acquire Krispy Kreme for $21 per share in cash, or a total equity value of approximately $1.35 billion.

Krispy Kreme’s Board of Directors unanimously approved the agreement, which represents a premium of approximately 25% over the Company’s closing stock price on May 6, 2016.

Jim Morgan, Chairman of the Board of Directors of Krispy Kreme, commented, “For nearly 80 years, our iconic brand has been touching and enhancing lives through the joy that is Krispy Kreme.”

He continued, “This transaction puts us in the best possible position to continue to spread that joy to a growing number of people around the world while delivering significant value to Krispy Kreme shareholders. I am confident the JAB team is the right partner with whom to continue building upon our incredible legacy.”

JAB in December spent $13.9 billion to buy the home-brewing company Keurig Green Mountain. It also owns Caribou Coffee and has controlling stakes in Peet's Coffee & Tea.

 

Due to the announcement and pending transactions under the merger agreement, Krispy Kreme’s Board of Directors has determined to postpone its 2016 Annual Meeting of Shareholders, originally scheduled for June 14, 2016.

KKD stock has a Zacks Rank #5 (Strong Sell), and the stock is up 24.17% as of 11:02 PM ET.

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