Tech provider Presto reworks SPAC deal and cuts valuation

Presto offers voice commands, tablets and other technology for restaurants. / Photography courtesy of Presto

Restoration technology provider Presto has reworked its plans to go public through SPAC as the market for such offerings cools.

The company, which offers voice commands, tablets and other tools for restaurants, is still merging with publicly traded Special Purpose Acquisition Company Ventoux, or SPAC, but at a lower valuation and with a financing different from that initially envisaged. The transaction will make Presto a public company.

SPAC deals, which have become popular in 2020, are typically funded by public funds raised by the acquiring front company. When Presto and Ventoux unveiled their plan in November, it was to be funded by $172.5 million from the Ventoux trust account and $70 million in PIPE, or private investment in public capital.

But on Tuesday, citing changes in the SPAC market, the companies said they had restructured the deal to rely more on PIPE: namely, $60 million in private equity led by Cleveland Avenue and $40 million dollars from “other sources”. Ventoux will contribute $13 million from his trust account.

The new financing structure reduces 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 NASDAQ.

Investor appetite for SPACs has exploded over the past two years: there were more than 400 such deals in 2021, compared to just 59 in 2019. But the recent economic turmoil has not been kind to investors. old hot finance vehicle. Companies that went public through SPAC lost about half their value in 2022, according to CNBC’s SPAC Post Deal Index, as investors avoided risky bets. And dozens of SPAC agreements have been canceled entirely, including the planned merger of Panera Bread and Danny Meyer’s Meyer’s USHG Acquisition Corp.

Still, Presto and Ventoux are moving forward, albeit at a more modest valuation.

“We believe the additional capital is a strong vote of confidence in the business combination and will give Presto all the tools it needs for a strong start in its public life,” Ventoux CEO and President Ed Scheetz said in a statement. communicated. “We look forward to continuing to work with the Presto team and our investors to close this deal and maximize value for all stakeholders.”

The funding will allow Presto to continue to develop its technology and enter more restaurants. Founded in 2008, it offers a variety of products, including drive-thru automation and tabletop payment tablets, which have recently seen demand as customers return to on-site dining amid continuing 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 chairman Don Thompson and focused on food and technology companies. As part of its investment in Presto, Chief Financial and Investment Officer Keith Kravcik will join Presto’s Board of Directors.

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