Krispy Kreme Falls Short of IPO Goal to Raise Only $500 Million

(Bloomberg) -- Krispy Kreme Inc. priced its U.S. initial public offering below a marketed range to raise $500 million, short of the $640 million it had sought.

The company said in a statement Wednesday that it sold more than 29 million shares for $17 each. While the size of the sale was expanded from the almost 27 million shares that Krispy Kreme had planned to sell, the offer price was well below the $21 to $24 marketed range.

Krispy Kreme is valued in the listing at about $2.78 billion. The company had guided investors earlier that it could price its IPO below the target range, Bloomberg News reported.

The debut comes during one of the busiest weeks on record for U.S. IPOs, with $13.6 billion of shares either already trading, or expected to begin trading, including listings by special purpose acquisition companies.

This week's listings included the second biggest of the year on a U.S. exchange. In its debut after raising $4.4 billion in an upsized transaction, Chinese ride-hailing company Didi Global Inc. initially rose as much as 29% Wednesday but ended the day up only 1% from its IPO price.

Krispy Kreme, owned by food- and consumer-goods focused investment firm JAB Holdings BV, plans to use proceeds from the IPO to pay down debt and buy back shares from certain executives, as well as for general corporate purposes, according to its filings with the U.S. Securities and Exchange Commission. JAB will continue to own almost 78% of the company's shares after the IPO.

Pandemic Disruption

Krispy Kreme, based in Charlotte, North Carolina, is returning to the public market as the restaurant industry tries to recover from a challenging stretch brought on by the coronavirus pandemic. Chains focused on breakfast were particularly affected, as disruptions to morning commutes and school drop-offs led many Americans to make more of their own meals rather than buy coffee or doughnuts away from home.

Still, Krispy Kreme has expanded in e-commerce, a service that fared well during pandemic lockdowns. That part of the business now accounts for close to a fifth of sales in the U.S., fueled by its Insomnia Cookies delivery concept.

JAB acquired Krispy Kreme in 2016 in a $1.35 billion deal to take it private. JAB, an investment vehicle for the Reimanns, one of Germany's wealthiest families, has expanded aggressively in restaurants and beverages and controls Pret a Manger and JDE Peet's.

Krispy Kreme's offering is being led by JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp. and Citigroup Inc. Krispy Kreme‘s shares are expected to begin trading Thursday on the Nasdaq Global Select Market under the symbol DNUT.