Big changes are in store for the infamous Twinkies brand maker. Hostess Brands LLC has announced that the snack cake company and its debt will be bought by Gores Holding Inc. for $725 million, who will then take the company public.
This move comes only a couple years after Hostess sold itself to Apollo Global Management, LLC and consumer industry investor C. Dean Metropoulos in 2013 for $410 million. The acquisition is expected to close by end of summer, when Gores will then change its name to Hostess Brands Inc.
"I have enjoyed working together with Apollo to build a vibrant and exciting company, and we are pleased to partner with the Gores Holdings team as we move to the next stage of Hostess' growth and expansion," stated Metropoulos, according to International Business Times.
Hostess said that the stock offering, following its purchase by Gore, will put its value at around $2.3 billion. Reuters reported that Hostess chose this deal with an IPO end goal after failing to find a sufficient buyer for its desired price when the company first began discussing a sale.
Gores Holdings, an affiliate of private equity company Gores Group, is a special purpose acquisition company that will reportedly put up $725 million in cash, with about $173 million to pay down debt. Reuters stated that SPACs have no assets, but use IPO proceeds and bank financing to take companies public through acquisition. Gores Group Chief Executive Alec Gores and Metropoulos have also committed $350 million through private placement.
“Hostess presents a unique opportunity to invest in an iconic brand with strong fundamentals that is poised for continued growth,” Alec Gores, Chairman and Chief Executive of the Gores Group, said in a statement according to International Business Times.
Apollo and Metropoulos will receive shares in the combined company worth around 42 percent ownership stakes. Metropoulos will remain Executive Chairman of Hostess, and William Toler will continues as Chief Executive.
NPR stated that this latest announcement is following in a line of changing trends for Hostess as it bounces back from its previous Chapter 11 bankruptcy protection, and brief operations shut down in 2012. Since the company restarted production in 2013, Hostess has seen leaner operations.
As the acquisition of Hostess goes through, and more information is released about the company’s impending IPO, stay with Deli Market News for the latest.