Time for a HoHo
Steve’s breakdown: The Hostess family has finally found a home . . . in Manhattan. That’s right, Apollo Global Management will own 58% of the company though we think they’ll still make the cakes in Kanas City.
Time to rev-up the marketing machine!
NEW YORK, NY & KANSAS CITY, MO: : The owners of Hostess Brands, the maker of Twinkies and Ding Dongs, are selling the snack business three years after buying it out of bankruptcy.
Private-equity firm Apollo Global Management and billionaire investor C. Dean Metropoulos said Tuesday they reached a $725 million deal with Gores Group to take it public.
The current owners will hold a 42 percent in the company after the deal. Apollo and Metropoulos bought most of the Hostess snack brands out of liquidation for $410 million in 2013 and successfully relaunched products.
Last year, they tried to flip the business for $2.3 billion but shelved the sale after failing to get offers at the hoped-for price.
Gores Holdings said the new Hostess will have an enterprise value of around $2.3 billion when it goes public, or roughly 10.5 times its $220 million of adjusted earnings before interest, taxes, depreciation and amortization, according to a statement.
As part of the deal, Gores Holdings, an affiliate of Gores Group that was set up to make acquisitions and other deals, will pay $375 million in cash to Hostess shareholders.
Additional investors, including Gores Group CEO Alec Gores and Metropoulos, have committed $350 million through a private placement, according to the statement.
Metropoulos, who will roll over $50 million into the new company, will remain executive chairman of Hostess. William Toler will continue as chief executive.
The Hostess deal is expected to close in the third quarter of 2016.
The once-iconic bakery shut down its operations and laid off more than 18,000 workers amid a labor dispute in 2012.
Its comeback has been bittersweet as the new owners remade it into a much leaner operation. Hostess has roughly 1,000 employees and five factories, down from 14 plants prior to its bankruptcy.