Krispy Kreme made a choppy debut as a publicly-traded company before rising 23.5% on Thursday. The doughnut maker priced its IPO at $17 a share late Wednesday, well below the expected range of $21 to $24. It plans to raise $500 million through an offer of 29.4 million shares.
Krispy Kreme /zigman2/quotes/227704127/composite DNUT -3.33% was public from 2000 to 2016, so the IPO will mark the return of the company to the public markets.
JAB Holdings Co., a German conglomerate based in Luxembourg with investments in companies like Panera Bread, Keurig Dr Pepper Inc. /zigman2/quotes/201754990/composite KDP +0.74% and the fashion brand Bally, took Krispy Kreme private in a $1.35 billion deal in May 2016.
JAB plans to purchase between $50 million and $100 million in shares.
There are 19 underwriters on the IPO with J.P. Morgan, Morgan Stanley, BofA Securities and Citigroup the lead book-running managers. Krispy Kreme expects to trade on the Nasdaq under the ticker “DNUT.”
The company intends to use the proceeds from the offering to pay outstanding debt and for general business purposes.
Krispy Kreme intends to offer a dividend, although it will need to become profitable to support a program. JAB Holdings will retain majority voting power once the deal closes, meaning individual investors will have little say in the running of the company.
“JAB will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval,” the prospectus says.
JAB and other companies in its portfolio are well-represented on the Krispy Kreme board, including Olivier Goudet, who is chairman of the Krispy Kreme board and chief executive of JAB; David Bell, a director and senior partner at JAB; and Patricia Capel, also a director and a partner at JAB.
Goudet also intends to buy $5 million in shares in the offering.
“Accordingly, for such period of time, JAB will have significant influence with respect to our management, business plans, and policies, including the appointment and removal of our officers,” the prospectus said.
Krispy Kreme’s Chief Executive Michael Tattersfield has been in the role since January 2017. He was previously chief executive of Caribou Coffee, another JAB Holding brand, from August 2008 to July 2017.
Josh Charlesworth has been chief financial officer since April 2017 and has served as chief operating officer since May 2019. Prior to Krispy Kreme, he worked with Mars Inc., which manufactures candy, pet food and more.
Hot Light Theater Shops and glazed waterfalls are just two mouth-watering features that Krispy Kreme Inc. discusses in its IPO prospectus, which was filed this month after the doughnut seller first filed confidentially in early March .
The company describes itself as an “affordable indulgence,” with 1.3 billion doughnuts sold across 30 countries in fiscal 2020.
“Despite our high brand awareness, we have a limited presence in certain key U.S. markets, such as New York and Chicago and have yet to build a significant presence in key U.S. cities, including Boston and Minneapolis,” the prospectus says.
China, Brazil and parts of Western Europe are also viewed as attractive geographic locations that the company intends to enter. Geographic expansion is described as key to the company’s growth in the prospectus.
Revenue in 2020 totaled $1.122 billion, the highest sales level ever for the brand, double the $557 million generated in 2016, and up from $961 million in 2019.
But net losses for fiscal 2020 were $60.9 million, or almost double the loss of $34.0 million recorded in the previous year.
An 83-year-old company based in Charlotte, NC., Krispy Kreme is sold at its own shops, which are also franchised, online, and through grocery stores and other outlets. The Hot Light Theater Shops and other hubs are known for the “Hot Now ” light, which lets customers know fresh doughnuts are ready, and “glaze waterfalls.”