The parent company of the golden sponge cake with creamy filing — otherwise known as the Twinkie — plans to go public again, four years after the company almost shut its doors forever.
Nathan Bomey of USA Today has the news:
The owners of Hostess — private equity firm Apollo Global Management and billionaire investor C. Dean Metropoulos and his family — said Tuesday they had reached a deal to turn the Twinkies maker into a publicly traded company with an enterprise value of about $2.3 billion.
An affiliate of private-equity firm Gores Group has committed $375 million and a group of other investors including Gores Group CEO Alec Gores and others have invested $350 million to help fund the transaction, Hostess said in a statement.
Following the deal, the current owners will hold about 42% of the Gores Group affiliate that is helping to fund the transaction.
“Hostess presents a unique opportunity to invest in an iconic brand with strong fundamentals that is poised for continued growth,” Gores said in a statement. “We look forward to working with the team at Hostess as we collaborate to further capitalize on these attractive growth prospects.”
Hostess nearly collapsed in 2012 after its bankruptcy filing devolved into a brawl with its unions over the company’s distribution network and labor costs. The standoff ended in some 15,000 unionized workers losing their jobs.
Michael de la Merced of the New York Times focused on how its recent owners have revived the company:
Hostess’s former parent sold its cake business, which had outlived wars and low-carb diet fads, to Apollo and Metropoulos, both of which are seasoned corporate turnaround players, in the spring of 2013 for about $410 million. (The company also sold its Wonder Bread business to Flowers Foods for $360 million.)
Apollo and Metropoulos focused on reviving a nearly dead brand. They restarted operations that had been dormant during Hostess’s bankruptcy and made the company’s shopping operations more efficient. Under the two owners, Hostess collected about $650 million in sales during the 12 months that ended May 31.
Including Tuesday’s deal, Apollo and Metropoulos together stand to collect a return of about $1 billion on an initial equity investment of about $185 million. (During the three years that they owned Hostess, the two companies collected several hundred million dollars in dividends from the snack maker.)
Hostess’s owners explored putting the baker up for an initial public offering in recent months, but the approach from Gores provided a more certain payout.
Bailey Bischoff of the Christian Science Monitor wrote about how the company turned itself around:
Since 2013, Apollo Global Management and Metropoulos & Company have focused on streamlining the production of Hostess treats.
In an effort to increase efficiency, 600 thrift stores which had formerly sold Hostess products were shuttered. Instead of running 11 factories at 50 percent capacity, Hostess is running four factories at 90 percent capacity. Just last year, Hostess closed the bakery in Chicago where the Twinkie was invented, cutting 400 jobs.
Hostess also made major changes to its workforce. Before the strike and bankruptcy, the majority of Hostess employees were unionized; now none are. Hostess also reduced the number of employees, now employing only 1,800 people where it used to maintain a staff of 2,500.
Though Apollo Global Management and Metropoulos & Company will retain only 42 percent ownership of the company, Hostess’ leadership will stay the same. Dean Metropoulos will remain as executive chairman and William Toller will stay on as chief executive officer.
