BAB to Merge with Internet Company

BAB Holdings, the Chicago-based parent company of Big Apple Bagels, My Favorite Muffin and Brewster's Coffee, says it will merge with a New York-based Internet company.

The seemingly odd merger appears to be a move to boost valuation for current shareholders, as it will not affect the chains or the company's management structure. BAB's current business will become wholly-owned subsidiaries, which would be operated by current BAB management. The agreement anticipates the subsidiary to be spun off in the future to current BAB shareholders. The existing shareholders would continue to own the same number of shares, which would represent 10% of the equity in the merged company.

Furthermore, the new parent company will provide financing for BAB's current bank debt.

"We are going to be merging with a group of talented individuals who have an excellent 7-year history of successfully incubating small, development-stage companies. This merger represents a transformation of BAB which we believe will be very beneficial to our shareholders," said BAB President and CEO Michael W. Evans.

"Our current shareholders will maintain their ownership interest in the existing business, both before and after the merger. Additionally, they will receive a 10% ownership interest in the Internet Incubator and internet related businesses. We believe that this is a significant enhancement to our shareholder value and, coupled with the attractive financing provided by our merger partner, greatly improves BAB's appeal in the financial marketplace."

Edited by Bill McDowell