CHARLOTTE, N.C. - Krispy Kreme, Inc. (NASDAQ: DNUT) has sold its majority ownership of Insomnia Cookies to investment firms Verlinvest and Mistral Equity Partners. The deal, which closed on July 17, 2024, values the late-night bakery concept at $350 million, a figure that has doubled since Krispy Kreme's acquisition in 2018.
Krispy Kreme announced that it received $127.4 million from the sale and anticipates an additional $45 million following Insomnia Cookies' refinancing of intercompany debt. The doughnut company plans to use the proceeds to bolster its fresh doughnut business, expand availability, and reduce debt. Krispy Kreme will retain approximately a 34% minority stake in Insomnia Cookies.
The President and CEO of Krispy Kreme, Josh Charlesworth, stated that the transaction aligns with the company's focus on its core strategy of producing and distributing fresh doughnuts daily. He expressed confidence in the new partnership with Verlinvest and Mistral, citing their food industry experience and successful track record.
Seth Berkowitz, Founder and CEO of Insomnia Cookies, will continue his role and welcomed the new partnership, which builds on a five-year relationship with Krispy Kreme. Representatives from both Verlinvest and Mistral Equity Partners expressed their enthusiasm for the investment and the brand's growth potential.
Krispy Kreme anticipates updating its full-year 2024 guidance during its second-quarter earnings call. Financial advisory roles in the transaction were filled by Evercore and Morgan Stanley (NYSE:MS) & Co. LLC.
Insomnia Cookies, founded at the University of Pennsylvania, has grown to over 250 locations worldwide, offering a variety of cookies, ice cream, and sweet treats for delivery and nationwide shipping.
The information in this article is based on a press release statement from Krispy Kreme, Inc.
In other recent news, Krispy Kreme has been the focus of several important developments. The company's first-quarter performance exceeded expectations, with a reported organic revenue growth of 6.7% year-over-year. This positive financial result comes alongside ambitious global expansion plans, including entries into France, Brazil, and Germany.
Analysts at Truist Securities and JPMorgan (NYSE:JPM) have upgraded Krispy Kreme's stock, citing potential in the company's growth prospects. Truist cited a promising partnership with McDonald's (NYSE:MCD) and an anticipated hastening of revenue growth as key factors. Meanwhile, JPMorgan's upgrade reflects a belief in Krispy Kreme's value proposition and future growth prospects.
In personnel news, Krispy Kreme appointed Atiba Adams as its new Chief Legal Officer, a move expected to contribute significantly to the company's growth objectives.
InvestingPro Insights
As Krispy Kreme (NASDAQ: DNUT) navigates its strategic shift with the recent sale of Insomnia Cookies, investors and analysts are closely monitoring the company's financial health and market performance. According to InvestingPro data, Krispy Kreme holds a market capitalization of approximately $1.89 billion. Despite challenges indicated by a negative P/E ratio of -40.95, reflecting market skepticism about current profitability, the company's revenue growth remains positive with an 8.47% increase over the last twelve months as of Q1 2024.
Analyzing further, Krispy Kreme's gross profit margin stands at 28.63%, showcasing its ability to maintain profitability on its products despite the broader financial context. However, it's worth noting that the company is trading at a high EBITDA valuation multiple, suggesting that the market has priced in expectations for future earnings growth. This aligns with one of the InvestingPro Tips, which indicates that analysts predict Krispy Kreme will be profitable this year. Moreover, with a PEG ratio of 0.32, investors may find the stock's growth prospects attractive relative to its earnings.
Investors considering Krispy Kreme as part of their portfolio can find additional insights with InvestingPro. There are currently 7 more InvestingPro Tips available, including analysis on the company's debt burden and short-term liquidity challenges. For those looking to delve deeper into Krispy Kreme's valuation and performance, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/DNUT.
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