Gores Group Holdings to take majority stake in Twinkies maker Hostess Brands

By Elaine Watson

- Last updated on GMT

Gores Group to invest in Twinkies maker Hostess Brands

Related tags Finance

Private equity firm Gores Group Holdings will take a majority stake in Twinkies maker Hostess Brands LLC and plans to introduce it as a publicly traded company with an enterprise value of c. $2.3bn.

The deal marks a new chapter for Hostess, which was bought out of bankruptcy in 2013 by private equity firm Apollo Global Management LLC and investor Dean Metropoulos.

Following the deal – expected to close in the third quarter of 2016 - funds managed by affiliates of Apollo and Metropoulos will hold a combined stake of around 42% in Gores Holdings, while Dean Metropoulos and William Toler will stay on as executive chairman and CEO respectively.

When the deal has closed, the plan is to change the company’s name to Hostess Brands, Inc, said Gore Holdings, which said an IPO “better enables Hostess to continue executing on its long-term growth plan by providing greater access to capital to fund future innovation and acquisitions.”

The Gores Group chairman and CEO Alec Gores added: “Hostess presents a unique opportunity to invest in an iconic brand with strong fundamentals that is poised for continued growth.”

Hostess, which generated revenues of c.$650m in the year to May 31, and operates bakeries in Kansas, Indiana and Georgia, “is one of the highest EBITDA margin and cash generative food platforms in the US,"​ said Andy Jhawar, senior partner and head of the consumer and retail group at Apollo.

Along with $375m of cash held in Gores Holdings’ trust account, additional investors have committed to participate via a $350m private placement led by Alec Gores and comprising large institutional investors, C. Dean Metropoulos (via $50m of additional rollover contribution), and Gores affiliates.

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