Restaurant tech supplier Presto has reworked its plans to go public via SPAC as the market for such deals cools down.
The company, which offers voice ordering, tablets and other tools for restaurants, is still merging with Ventoux, a publicly traded special purpose acquisition company, or SPAC—but at a lower valuation and with a different funding structure than originally envisioned. The transaction will make Presto a public company.
SPAC deals, which became popular in 2020, are typically financed with public money raised by the acquiring shell company. When Presto and Ventoux unveiled their plan in November, it was to be funded by $172.5 million from Ventoux’s trust account and $70 million in PIPE, or private investment in public equity.
But on Tuesday, citing changes in the SPAC market, the companies said they had restructured the deal to rely more heavily on PIPE: Namely, $60 million in private equity led by Cleveland Avenue and $40 million from “other sources.” Ventoux will contribute $13 million from its trust account.
The new financing structure cuts the combined company’s valuation to $525 million from $800 million, according to an SEC filing. The deal is expected to close in the third quarter and will bring the newly formed company, Presto Technologies, to the NASDAQ.
Investors’ appetite for SPACs boomed over the past two years: There were more than 400 such transactions in 2021 compared to just 59 in 2019. But recent economic turmoil has not been kind to the formerly red-hot financing vehicle. Companies that went public via SPAC have lost about half of their value in 2022, according to CNBC’s SPAC Post Deal Index, as investors shied away from risky bets. And dozens of SPAC deals have been called off entirely, including the planned merger of Panera Bread and Danny Meyer’s Meyer’s USHG Acquisition Corp.
Still, Presto and Ventoux are forging ahead, albeit at a more modest valuation.
“We believe the additional capital provides a powerful vote of confidence in the business combination and will give Presto all the tools needed for an excellent start in its public life,” said Ed Scheetz, CEO and chairman of Ventoux, in a statement. “We look forward to continuing to work with the Presto team and our investors in consummating this deal and maximizing value for all stakeholders.”
The funding will allow Presto to continue developing its technology and get into more restaurants. Founded in 2008, it offers a variety of products including drive-thru order automation and tabletop payment tablets, which have been in demand recently as customers return to on-premise dining amid an ongoing labor shortage. It has shipped more than 250,000 of its systems to restaurants including McDonald's and Chili's.
Lead investor Cleveland Avenue was founded by former McDonald’s CEO and President Don Thompson and has focused on food and tech companies. As part of its Presto investment, Chief Financial and Investment Officer Keith Kravcik will join Presto’s board.
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