Shares of Krispy Kreme Doughnuts (KKD) moved higher by more than 24% on Monday after JAB Holdings announced it was acquiring the doughnut chain. The Luxembourg conglomerate agreed to pay $21 per share for Krispy Kreme Doughnuts.
The move could negatively affect shareholders of other companies competing against Krispy Kreme such as Starbucks (SBUX) - Get Starbucks Corporation Reportand Dunkin' Brands (DNKN) - Get Dunkin' Brands Group, Inc. Report.
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JAB's other holdings, including Peet's Coffee & Tea and Caribou Coffee, could help Krispy Kreme execute its latest strategy of providing better beverages and improve its overall menu. JAB also owns Einstein Noah, a fast casual restaurant chain that is best known for its bagels and recently purchased Keurig Green Mountain, which makes single-cup coffee machines.
But all this doesn't mean that Starbuck's and Dunkin' Donuts are dangerous stocks to own.
After the merger, Krispy Kreme will still be independently operated. The donut chain, which was founded in Winston-Salem, N.C. in 1937, has more than 1,100 locations world-wide. In March, Krispy Kreme's management said it was planning to open more than 100 locations internationally and 30 domestically during 2017. JAB didn't say whether those plans will continue.
Management said that it wanted to increase its beverage sales, which would help it compete with Dunkin' Donuts and Starbucks.
Peet's and Caribou could particularly help Krispy Kreme achieve this strategy, although JAB's other assets could also help the company broaden its menu.
Starbucks or Dunkin' are unlikely to become dangerous stocks. However, shareholders should follow this story to see if Krispy Kreme begins grabbing market share.
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This article is commentary by an independent contributor. At the time of publication, the author held stock in Starbucks.