On Tuesday, Twinkies and Ho Hos maker Hostess Brands LLC announced its plans to go public later this year in a deal that values the snack-cake company at roughly $2.3 billion.
Hostess’ owners—private equity firm Apollo Global Management and billionaire investor C. Dean Metropoulos and his family—is set to sell a majority stake in the company to a publicly traded affiliate of investment firm the Gores Group for $725 million.
In a statement, Hostess explained that Gores Holdings, Inc., a special-purpose acquisition company sponsored by a Gores Group affiliate, committed $375 million, and a group of other investors, including Mr. Metropoulos and Gores Group CEO Alec Gores, invested an additional $350 million to the deal.
"Hostess presents a unique opportunity to invest in an iconic brand with strong fundamentals that is poised for continued growth," Alec 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.”
After the deal closes, Hostess’ current owners will hold about a 42% combined stake in Gores Holdings. Mr. Metropoulos, who is executive chairman, and chief executive William Toler will keep their current positions.
Back in 2012, Hostess nearly collapsed after its bankruptcy filing resulted in a standoff with its unions over the company’s labor costs and distribution network, and it ended in roughly 15,000 unionized workers losing their jobs. Hostess then liquidated its assets, and Flowers Foods Inc. (NYSE:FLO) and other buyers bought its bread brands, which included Nature’s Pride and Wonder Bread, while its current private-equity investors purchased the Twinkies, Ding Dongs, and CupCakes brands.
After Apollo and Metropoulos & Co. purchased Hostess out of liquidation for about $410 million, the firms created a new distribution system, one that sends products directly to warehouses instead of stores as well as reduced its manufacturing plants to three in Kansas, Indiana, and Georgia.
“We are extremely proud of all that we have accomplished together since we acquired these assets out of liquidation in 2013 and rebuilt the company into the great platform business it is today," said Apollo senior partner and head of the consumer and retail group Andy Jhawar.
Under Apollo and Metropoulos, Hostess had about $650 million in sales during the 12 months that ended May 31.
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