Krispy Kreme Sells Majority Stake in Insomnia Cookies

By Tamara Parker • Monday, July 22 15:28 • Permanent Link

Krispy Kreme, Inc. (NASDAQ: DNUT) has announced the sale of a majority ownership stake of Insomnia Cookies to Verlinvest and Mistral Equity Partners for a total enterprise value of $350 million. This represents a doubling of the enterprise value since Krispy Kreme's 2018 acquisition of Insomnia Cookies.

Krispy Kreme received $127.4 million for the sale and expects to receive an additional $45 million following an Insomnia Cookies refinancing of intercompany debt. This influx of capital will be used to further strengthen Krispy Kreme's fresh doughnut business, expand availability, and pay down debt. Furthermore, Krispy Kreme will remain as an approximately 34% minority shareholder in Insomnia Cookies.

The company expressed confidence in Verlinvest and Mistral as the right partners for Insomnia Cookies, citing their food industry experience and track record of value creation. Insomnia Cookies' founder, Seth Berkowitz, will continue in his role as CEO.

Krispy Kreme expects to update its full-year 2024 guidance at its upcoming second quarter 2024 earnings call. Evercore and Morgan Stanley & Co. LLC acted as financial advisors in the transaction.

This sale marks a significant development for Krispy Kreme as it focuses on its core strategy of producing, selling, and distributing fresh doughnuts daily while strengthening its balance sheet. The company's iconic Original Glazed® doughnut is recognized worldwide, and it operates in more than 35 countries through a network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing e-commerce and delivery business with over 14,000 fresh points of access.

Insomnia Cookies, headquartered in Philadelphia, PA, is a rapidly expanding late-night bakery concept with over 250 locations worldwide. Founded in 2003, the company offers a wide variety of delicious cookies, ice cream, and other sweet treats for in-store, local delivery, and nationwide shipping.

Verlinvest, an international family-backed evergreen investment company, focuses on the FMCG, health, consumer technology, and lifestyle categories, with a portfolio that includes brands such as Oatly, Tony’s Chocolonely, K1 Speed, Vita Coco, and Mutti.

Mistral Equity Partners, a New York City-based private equity firm, specializes in the consumer and media sectors. Its portfolio includes investments in companies such as Jamba Juice, Lovesac, OneSpaWorld, and Shearer’s Foods.

The transaction reflects a strategic move for Krispy Kreme as it strengthens its position in the market and continues to pursue growth opportunities in the sweet treat industry. Following these announcements, the company's shares moved -3.5%, and are now trading at a price of $10.8. For the full picture, make sure to review Krispy Kreme's 8-K report.

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