LOS ANGELES -- Hostess Brands LLC is testing the investor appetite for Twinkies, Ho-Hos and Ding Dongs, announcing it will begin trading on the Nasdaq Stock Market under the ticker symbol TWNK.
The 86-year-old brand is expected to start trading Nov. 7, making an appearance on Wall Street for the first time since it was bought out of liquidation almost four years ago, according to an article in The Wall Street Journal.
The maker of the indulgent, sweet snacks is raising its profile at a time when gluten-free, non-GMO and reduced-sugar cakes and cookies are vying for shelf space in retail outlets.
The Journal reported that Hostess is going public via a complex financial transaction using a publicly traded SPAC, or special-purpose acquisition company. A SPAC is a way for companies to go public without launching a risky initial public offering.
The acquisition company is investment group Gores Holdings Inc., created more than a year ago and based in Los Angeles.
Alec Gores, founder and chief executive of the Gores Group, said he and other investors were initially concerned that Hostess didn’t fit into the current healthy eating trend, but he believes it has growth potential. “It’s an iconic brand, part of Americana,” he said.
Hostess said it generated $620.8 million in revenue and $88.8 million in profit last year.
Gores Holdings shares, which are expected to trade under the symbol TWNK, traded up 5% on Thursday.
The listing is a big turnaround from November 2012, when Hostess shut down its factories following a nationwide strike by members of its bakers union in protest of a court-imposed labor contract that cut wages and other benefits. Four months later, Dean Metropoulos and Apollo Global Management LLC teamed up to buy the Hostess snack cake brands and four factories out of liquidation for $685 million in cash and loans.
By July 2013, they were shipping products to stores again.
The investment firms started with very little but had one big advantage: The new Hostess came without the pension costs, union contracts and $1.3 billion in debt that weighed down its previous owners.
The old Hostess employed 19,000 people. The new Hostess has about 1,200 workers, but it also doesn’t include all the brands the old company had, such as Wonder Bread. Costs were further pared when Apollo and Metropoulos invested more than $130 million in upgrading facilities with larger ovens and adding robots that can pack Twinkies into boxes. They also switched to third-party drivers and a central distribution system, rather than delivering their snacks directly to every store. And the shelf life of the snack cakes was doubled to 65 days.
Hostess, meanwhile, is adding new products, including deep-fried Twinkies. At the NACS Show last month in Atlanta, Hostess featured chocolate Twinkies and white-chocolate coated Ding-Dongs. Peanut butter Ho-Hos are in the pipeline and due out soon.
Hostess dates back to 1919, when the Hostess CupCake was introduced to the public, followed by Twinkies in 1930. Hostess produces a variety of new and classic treats also including Donettes and Fruit Pies.
Gores Holdings is a special purpose acquisition company sponsored by an affiliate of The Gores Group, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Gores Group is a global investment firm. With headquarters in Los Angeles, The Gores Group maintains offices in Boulder, Colo., and London.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.