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.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.