Today, Panera Bread is returning to its place atop the soup-and-sandwich throne. After announcing plans for a SPAC (special purpose acquisition company) merger with Union Square Hospitality Group (USHG) Acquisition Corp. (NASDAQ:HUGS), Panera fans and HUGS stock investors alike have a lot to cheer.
USHG is the blank-check acquisition company associated with Shake Shack (NYSE:SHAK) founder Danny Meyer. After its initial public offering (IPO) earlier this year, USHG is set to funnel roughly $300 million into Panera. The unconventional deal drove HUGS stock up more than 8% Monday and continues to operate at elevated levels.
9 Things to Know About HUGS Stock Heading Into the Panera IPO
- A blank-check company has no assets of its own, but promises a return on investments based on a strategic acquisition.
- Current arrangements for the merger would allow HUGS shareholders to convert their ownership, dollar for dollar, into Panera stock, once the company goes public.
- HUGS stock owners will have the opportunity to buy shares of Panera close to its initial offering price, something typically reserved for institutional investors.
- SPAC mergers have the benefit of timeliness compared to a traditional IPO.
- This will be Panera’s second time going public. It first went public in 1991, until JAB Holding purchased the chain for $7.5 billion in 2017. It then subsequently went private.
- After the IPO, USHG will become a subsidiary of Panera, with Panera taking on all funding the SPAC accrued.
- JAB will serve as a backstop in the merger. That is, it will pump money into the companies to keep IPO prices at target levels should investors jump ship prior to the conversion.
- The deal is still pending prior to shareholder approval.
- This isn’t the first time JAB has brought one of its companies public. After purchasing Krispy Kreme (NASDAQ:DNUT) in 2016, JAB raised $500 million in funding for the donut maker after launching its IPO this past summer.
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