NEW YORK (

TheStreet

) -- The delayed IPO of

Crumbs Bake Shop

, the New York City-based cupcake bakery and retail chain, is scheduled to close on April 21.

The deal to take Crumbs public through a merger with special-purpose acquisition firm

57th Street General Acquisition

values the cupcake chain at $66 million, including $27 million in cash and $39 million in stock.

Crumbs' IPO was first announced in January. Once it closes shares will be traded on the NASDAQ.

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Crumbs owner Jason Bauer plans to use capital raised in the

initial public offering to grow the chain outside the New York and Los Angeles markets, where the bulk of its stores are currently located.

Bauer hopes to open Crumbs locations in markets such as Dallas, Atlanta and Denver, with the goal of having 200 stores by 2014.

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A publicly traded Crumbs "will be a growth play" for investors, Michael A. Yoshikami, president and chief investment strategist at YCMNET Advisors, told

TheStreet

in January when reports of a Crumbs IPO first surfaced. He expects investor interest to be strong since Crumbs would represent one of the only ways to bet on the cupcake trend through an exchange-traded equity.

Revenue is also likely to show strong growth, Yoshikami said, "but

the real test will come after buzz declines," and the bakery-retailer "must be able to stand on

a cash flow story."

Under the terms of the deal, Crumbs will receive $27 million in cash and $39 million in stock. Crumbs owners stand to receive another $44 million in stock, dependent on future earnings and stock performance, according to early reports published in January. The deal was first expected to close in February but the tender offer was most recently postponed to April 21.

As a publicly traded company, Crumbs, the largest U.S. cupcake chain, will enjoy the capital it needs to fund its expansion plans.

Yoshikami said the cupcake space is "unique" with few national brands. Crumbs "could follow

the

Krispy Kreme

(KKD)

model but needs to watch out for the same problem that brand ran into." He cautioned that, for Crumbs, "expansion is doable but should be measured and leverage should be avoided to any excessive degree."

Krispy Kreme was founded in 1937, gained popularity in the 1990s and went public in 2000, opening at $8 per share. By mid-2003 the stock had soared to just below the $50 mark amid the rising popularity of hot glazed doughnuts and the lure of flashing lights in store windows to alert customers that a fresh batch had just come out of the oven.

Then the low-carbohydrate Atkins diet swept across America and Krispy Kreme's stock lost well over half its value in less than a year.

The market for cupcakes has grown rapidly in recent years with the success of chains like L.A.-based

Sprinkles

, Washington-based

Georgetown Cupcake

and New York's

Magnolia Bakery

.

Some have argued that the cupcake trend is a fad, and that taking Crumbs public could actualize something of a cupcake bubble.

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Yoshikami agreed that the cupcake trend is a fad, but that it is also "a niche with legs."

He said "growth expectations should be scaled back. This does not have the growth trajectory of tech. This is not

Google

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."

Economist Dan Gross also suggested a cupcake bubble could be growing, but noted that Crumbs comparable same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- have, on average, grown by double-digits each year for the past eight years.

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"When companies are at the front of a craze, they have the opportunity to capture lasting share in an emerging segment," Yoshikami said. "But expanding as if a frenzy will continue is dangerous and is exactly what happened to Krispy Kreme. They expanded too fast and without systems and controls in place to prepare for the inevitable slowdown.

"Crumbs must be watchful that their expansion and debt levels are based on conservative growth assumptions, not hoped for projections," he continued. "Slowdowns occur and when they do conservative practices will be valuable. It's easy to believe the hype especially when lines creep out the door for product (Krispy Kreme had lines that stretched for blocks), but good times will not always last."

"Even companies like

Apple

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are known for under-promising and making conservative assumptions. This is a good lesson for Crumbs," Yoshikami concluded.

Crumbs, founded in 2003 by Jason and Mia Bauer, currently operates around 34 stores across six states.

In 2010 Crumbs sold around 13 million cupcakes, bringing in $2.5 million in earnings before interest, taxes, depreciation and amortization on revenue of $31 million, the report said.

The

New York Times

reported in January that the Bauers will "retain a substantial stake in the business and continue to run the company," and that former fashion executive and 50% owner Edwin Lewis will keep his seat on the company's board. Lewis acquired half of Crumbs in 2008 for $10 million.

Crumbs sells gourmet cupcakes in a wide range of flavors including apple cobbler, blackbottom cheesecake, cookie dough and red velvet, retailing for around $3.75 per cupcake.

-- Written by Miriam Marcus Reimer in New York.

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