Always something of an oddity, USHG’s plan bore some semblance to Pershing Square Tontine’s (NYSE:PSTH) bid to join in Universal Music’s (AS:UMG) Amsterdam IPO. Pershing Square’s approach attempted to purchase shares ahead of the IPO and keep the SPAC running under a SPARC structure.
But, USHG instead intended to structure the transaction such that it would be acquired by Panera rather than the other way around, perhaps to avoid potential conflicts with the Investment Company Act of 1940, which was the basis for legal challenges to Pershing Square’s proposed deal. Under this structure, USHG shares would have been exchanged for Panera Brands stock at the equivalent value of its IPO price and the JAB restaurant conglomerate offered to provide a backstop.
Despite this complexity, it is the conditions of the IPO market rather than the SPAC market that appears to have nixed the deal. USHG Chairman Danny Meyer noted in the press release that it was unlikely that Panera would embark on its IPO plans in the near-term, so the SPAC decided to let the agreement’s June 30 expiration date pass without extension. The four consumer services companies that have dared to list via a traditional IPO so far in 2022 have had median returns of -29.9%.
USHG still has until March 1, 2023 to complete a transaction and will likely continue to search in hospitality and entertainment, given the experience of its sponsor, Union Square Hospitality Group, in managing a range of upscale New York City eateries.