WINSTON-SALEM N.C. Krispy Kreme Doughnuts Inc. reportedly received on Sunday night a $500 million unsolicited, and some say questionable, buyout offer from a private-equity group. The news sent Krispy Kreme’s stock surging as high as 12 percent on Tuesday.
The Winston-Salem Journal reported Monday that it had received a statement from MGL Asset Management Group LLC, a private-equity group based in Charlotte, N.C., that said the firm had sent via fax a $7.25-per-share buyout offer to Krispy Kreme. The newspaper also said the private-equity firm’s offer would include the assumption of Krispy Kreme’s debt. The per-share price would be a 38-percent premium on Krispy Kreme’s closing price of $5.27 last Friday.
Calls to Krispy Kreme, which operates or franchises about 400 locations, were not returned by the time of this posting. The company also had not filed any statements with federal regulators. A call to MGL Asset resulted in a brief recorded message and then was disconnected. An e-mail was not returned by press time. The Winston-Salem Journal report indicated that some of its sources found the offer suspicious.
The private-equity firm’s website says it holds more than $100 million under management and has numerous interests in real estate and “various business assets.” It does not appear under searches through the Securities and Exchange Commission.
The Winston-Salem Journal garnered the following statement from MGL Asset’s managing director, Dee Guess, when it inquired about the questionable nature of the proposed deal: “Our offer is a legitimate offer and it’s a transaction that we’ve been considering for quite some time. We are hoping that Krispy Kreme’s board will welcome the opportunity to make this transaction work.”
Krispy Kreme’s market capitalization is about $345 million. Its enterprise value, via Yahoo! Finance, is about $375 million. The company’s largest shareholder is a firm based in Kuwait that owns about 14 percent of Krispy Kreme stock.
The unconfirmed offer would come on the heels of Krispy Kreme’s first profitable quarter in two years. Still, the company is continuing to close underperforming domestic stores and report negative same-store sales, and its only growth has come from international development. Certain investigations surrounding past accounting practices and allegations of corporate misconduct are still open. Others, including a shareholder lawsuit, had been settled.
