Hostess Brands LLC, the maker of the iconic Twinkies and Ho Hos, said today (5 July) it had entered into a definitive agreement to sell a majority stake in the company to a publicly-traded affiliate of investment firm the Gores Group for around US$725m.

The deal will introduce Hostess as a publicly-listed company, with an anticipated initial enterprise value of around US$2.3bn, which Hostess said is more than 10 times the company’s estimated 2016 adjusted EBITDA of about US$220m.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

Under the terms of the acquisition, in addition to the US$375m of cash held in Gores Holdings’ trust account, Hostess said additional investors have committed to participate via a US$350m private placement led by Gores Group chairman and CEO Alec Gores, and “comprising large institutional investors C Dean Metropoulos, via US$50m of additional rollover contribution and Gores affiliates”.

The deal has been unanimously approved by the boards of both Gores Holdings and Hostess and is expected to close in the third quarter of 2016, subject to various regulatory and other approvals. On closing, the name of the company will be changed to Hostess Brands Inc.

Hostess said funds managed by affiliates and subsidiaries of Apollo Global Management LLC and C Dean Metropoulos and family, the current majority owners of Hostess, expect to hold a combined stake of about 42% in Gores Holdings on completion of the deal.

Dean Metropoulos and William Toler will continue to head up Hostess as executive chairman and CEO respectively after the deal, Hostess said. “This transaction better enables Hostess to continue executing on its long-term growth plan by providing greater access to capital to fund future innovation and acquisitions.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Metropoulos said: “We look forward to continuing both our strong organic growth through unique innovations and niche, strategic acquisitions, such as our recent acquisition of Superior Baking, which will extend Hostess’ consumer reach in the in-store bakery market and expand offerings to customers.”

Gores said: “We have evaluated a number of potential acquisitions for Gores Holdings and believe this transaction offers a superior option for our stockholders. Hostess presents a unique opportunity to invest in an iconic brand with strong fundamentals that is poised for continued growth. We look forward to working with the team at Hostess as we collaborate to further capitalise on these attractive growth prospects.”

Hostess was founded in 1919 with the introduction of the Hostess CupCake to the American public. In 1930, Twinkies were introduced. Today, Hostess Brands’ range includes Ding Dongs, Donettes and Fruit Pies, in addition to Twinkies and CupCakes.

Hostess had revenues for the 12 months ended 31 May 2016 of approximately US$650m. The company operates three baking facilities in Kansas, Indiana and Georgia.