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Crumbs Holdings LLC (“Crumbs”), the creator of the gourmet cupcake and the largest U.S.-based retailer of cupcakes, which operates under the name Crumbs Bake Shop, and 57th Street General Acquisition Corp. (“57th Street”), a special purpose acquisition company, announced that they have entered into an agreement through which 57th Street will acquire Crumbs. The proposed transaction is expected to be completed in March 2011. Following the closing of the transaction, 57th Street intends to change its name to Crumbs Bake Shop and list on the NASDAQ Stock Market as soon as reasonably practicable.
The Crumbs management team, led by Jason Bauer, cofounder and CEO; Mia Bauer, cofounder and chief creative officer; and John Ireland, chief financial officer, will continue to lead Crumbs following the consummation of the business transaction with 57th Street. Edwin Lewis, former CEO of both Tommy Hilfiger Inc. and Mossimo Inc. and a former senior executive at Polo Ralph Lauren Corporation, is expected to serve on the Crumbs Board of Directors. Lewis, an early investor in Crumbs, played a crucial role in the growth and success of both the Polo Ralph Lauren and Tommy Hilfiger brands and is credited with the turnaround of Mossimo along with its subsequent sale to Iconix Brands.
“Mia and I never could have envisioned how far Crumbs would come when we started eight years ago,” Jason Bauer says. “This transaction is a statement for us about how many lives Crumbs has touched and eight years of really hard work and the dedication of our amazing employees. We are very excited about Crumbs’ future and look forward to becoming a public company upon the closing of our transaction with 57th Street. The additional equity capital that may be available should enable us to execute our development strategy more quickly and help us reach our initial expansion to a planned 200 locations in the top 15 markets by year-end 2014.”
“My initial investment in Crumbs was predicated on my high personal regard for Jason and Mia, the performance of their initial stores, and the significant potential for the brand,” Lewis says. “To that point, with their creation of the gourmet cupcake and the subsequent experience they provide, they have defined a new, high-end fast-casual category. Although the concept’s broad daypart acceptance, wide demographic appeal, and numerous growth statistics back up that positioning, what I’m most impressed by is the power of the brand, which exhibits fierce customer loyalty in all its markets. Ultimately, it is this relationship with consumers that will serve as the foundation for unit expansion, the development of additional baked goods, and the growth of Crumb’s emerging beverage platform. I look forward to working with management and I’m excited to see the company so well positioned to create value for shareholders as they execute their plan.”
“We are very pleased to be partnering with Crumbs on this transaction,” says Mark Klein, chairman, CEO, and president of 57th Street. “The cupcake category is a unique subsection of the burgeoning fast-casual segment of the restaurant industry, and Crumbs has emerged as the cupcake leader with significant long-term potential. Crumbs benefits from a founder-driven culture and an experienced management team that has proven successful in expanding from a single Manhattan bake shop to 34 locations across the country. After reviewing a significant number of potential opportunities, we determined that given its significant potential for growth and further development of its brand, Crumbs presented the most attractive and compelling private company and was best aligned with our goal of maximizing value for our shareholders.”