The maker of Twinkies and Ding Dongs is selling a majority stake of itself, and its new owner plans to take the sugary bakery public. Fred Katayama reports.
You'll soon be able to buy a piece of Hostess again. We're talking about the stock. The maker of Twinkies and Ding Dongs is selling a majority stake of itself to an affiliate of the private equity firm Gores Group for about $725 million, and Gores will take the sugary bakery public. The current owners, private equity firm Apollo Global Management and investment firm Metropoulos, will retain a 42 percent stake. They pulled the company from the auction block last year believing it's worth more as a public company, valuing it at $2.3 billion. The sale marks the second time Hostess will have changed hands since the nearly century old company emerged from bankruptcy protection four years ago. IPO Financial Network president David Menlow thinks Hostess conjures up a warm feeling to older people but may not be compelling for younger investors, saying, "I imagine once the offering finally happens, it'll have turned somewhat tasteless." Gores chairman Alec Gores said he sees Hostess as an "iconic brand with strong fundamentals that is poised for continued growth." Under its current owners, Hostess relaunched the brands and focused on new distribution channels such as dollar stores and vending machines. That boosted its profitability, and the snacks regained market share.