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Krispy Kreme Inc. announced it is considering the sale of its Insomnia Cookies brand. If this plan pushes through, the company will arrange for an all-cash sale of its majority stake in the US-based chain of bakeries.
Krispy Kreme said it is still at the point of exploring all alternatives, including the unloading of its stake in Insomnia Cookies. The main reason for this is that it would like to direct most of its focus on selling donuts, which is its core business, to begin with.
Krispy Kreme’s Takeover of Insomnia Cookies
In 2021, Krispy Kreme went public for the second time with a valuation of about $2.7 billion at that time. It was in 2000 when it went public for the first time but was taken private when JAB Holding purchased it in 2016.
According to CNBC, the donut and coffeehouse chain acquired a controlling stake in Insomnia Cookies two years after going private. The company bought the cookie firm for less than $500 million.
After the acquisition of a majority stake, the firm expected high profits, and in fact, its expectation for the fiscal year 2023 is about $230 million. Krispy Kreme said that its decision to consider the sale of insomnia Cookies will allow it to unlock shareholder value as well as shift its focus on the production, selling, and distribution of fresh donut products daily.
The Sale of Insomnia Cookies
Fox Business reported that the cookie bakery chain is currently operating more than 250 store outlets across three countries. Krispy Kreme hired Evercore and Morgan Stanley to serve as its financial advisers on the acquisition deal.
“We acquired a majority stake in Insomnia Cookies to build our e-commerce and digital capability as well as assist Insomnia’s U.S. and International expansion,” Krispy Kreme chief executive officer, Mike Tattersfield, said in a press release. “Both efforts have been successful and it’s time for the next strategic step for both companies.”
He further stated, “Krispy Kreme has expanded rapidly through our capital light omnichannel model, and the brand is now in 37 countries selling fresh doughnuts through nearly 13,000 points of access daily. Looking ahead, our goal is to expand to more than 75,000 points both by entering 3-5 new countries each year and developing new channels like quick service restaurants.”
Photo by: Alex Haney/Unsplash
