Newspaper article International New York Times

Hostess Brands to Go Public after Selling Stake

Newspaper article International New York Times

Hostess Brands to Go Public after Selling Stake

Article excerpt

A publicly traded arm of the investment firm Gores Group is buying a controlling stake in Hostess Brands for $725 million.

Twinkies and Ho Hos are poised to find a new corporate home -- and a listing on public stock markets.

The owners of Hostess Brands announced on Tuesday that they had agreed to sell a majority stake in the company to a publicly traded affiliate of the Gores Group, an investment firm, for about $725 million.

The transaction will be the second in which Hostess -- born in 1919 with the Hostess CupCake and made famous with the seemingly indestructible Twinkie -- has traded hands since the company emerged from bankruptcy protection three years ago.

Since its exit from bankruptcy, it has been under the ownership of the investment firm Apollo Global Management and Metropoulos & Company, which previously owned the maker of Pabst Blue Ribbon beer.

The Gores Group, a private equity firm based in Los Angeles, is known for deals in an array of industries. In this case, the purchaser is Gores Holdings, a publicly traded arm of Gores Group known as a "blank-check" company, having raised $375 million in an initial public offering last year to finance acquisitions.

Gores will be coming in nearly four years after Hostess' former parent company filed for Bankruptcy Court protection under Chapter 11 of United States bankruptcy law, prompting fears that Twinkies might become extinct. The baker sold Hostess' 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.

Under Apollo and Metropoulos, Hostess collected about $650 million in sales during the 12 months that ended May 31.

Under the terms of the deal, Gores Holdings will pay out not only most of the $375 million that it raised in its I. …

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