Form 4: JAB Holdings B.V. Adjusts Exposure to Krispy Kreme Through Cash-Settled Equity Swaps

JAB Holdings B.V., a major shareholder of Krispy Kreme, Inc., has modified its economic exposure to the company's stock through a series of cash-settled total return equity swaps.

Summary

• JAB Holdings B.V. has adjusted its position in Krispy Kreme, Inc. (DNUT) through cash-settled total return equity swaps.
• On August 10, 2024, JAB Holdings B.V. entered into a long cash-settled total return equity swap (HSBC Long Swap) with HSBC Continental Europe, establishing long exposure with respect to 7,069,936 shares.
• The HSBC Long Swap provides JAB Holdings B.V. with economic results comparable to ownership of these shares, with all balances to be cash settled.
• The price reported for the HSBC Long Swap reflects a reference price of $12.7352 per share.
• On August 12, 2024, JAB Holdings B.V. extended the terms of its existing long cash-settled total return equity swaps with BNP Paribas to December 1, 2027.
• The extension of the BNP Paribas Long Swaps resulted in a deemed cancellation of the existing swaps and a deemed entry into new swaps with a later settlement date.
• The BNP Paribas Long Swaps provide JAB Holdings B.V. with economic results comparable to ownership of up to 8,500,000 shares.
• JAB Holdings B.V. directly owns 30,465,056 derivative securities.
• JAB Indulgence B.V. holds 74,885,435 shares of Krispy Kreme common stock, of which the reporting persons may be deemed beneficial owners.
• The reporting persons disclaim beneficial ownership of the securities reported, except to the extent of their pecuniary interest.

Sentiment

Score: 6

Explanation: The document reflects a neutral sentiment as it primarily reports transactions related to derivative holdings. The extension of the BNP Paribas Long Swaps could be interpreted as a slightly positive signal, indicating continued long-term interest.

Positives

• The extension of the BNP Paribas Long Swaps demonstrates JAB Holdings B.V.'s continued long-term interest in Krispy Kreme.
• The use of cash-settled swaps allows JAB Holdings B.V. to gain economic exposure to Krispy Kreme's stock without directly owning the shares.

Risks

• The value of the cash-settled swaps is dependent on the performance of Krispy Kreme's stock.
• Changes in market conditions could impact the value of the swaps and JAB Holdings B.V.'s overall investment in Krispy Kreme.

Future Outlook

The document does not contain specific forward-looking statements regarding Krispy Kreme's future performance, but the extension of the BNP Paribas Long Swaps suggests a continued long-term interest from JAB Holdings B.V.

Industry Context

The use of cash-settled equity swaps is a common strategy for large shareholders to manage their economic exposure to a company without directly owning or trading the underlying shares. This allows for flexibility in managing risk and capital.

Comparison to Industry Standards

• Cash-settled equity swaps are frequently used by major shareholders in publicly traded companies to manage their exposure without triggering direct ownership changes.
• Other companies in the food and beverage industry, such as Mondelez and Nestle, have seen similar transactions by their major shareholders.
• The terms of the swaps, such as the three-year term for the HSBC Long Swap and the extension to December 1, 2027, for the BNP Paribas Long Swaps, are within typical ranges for these types of agreements.

Stakeholder Impact

• The transactions may have a minor impact on shareholders as they reflect changes in the economic exposure of a major shareholder.
• The transactions do not directly impact employees, customers, suppliers, or creditors.

Key Dates