Hostess, The Maker Of Twinkies, Is Going Public

[mahatmakanejeeves]

If only this were of national importance.

Jul 5, 2016 @ 09:19 AM

Hostess, The Maker Of Twinkies, Is Going Public

Lauren Gensler
Forbes Staff 
I cover money and markets.



An IPO is the latest chapter in the Twinkie comeback saga. (Photographer: Daniel Acker/Bloomberg)

Hostess Brands , which makes Twinkies and Ho Hos, announced plans to go public on Tuesday in a deal that gives the company an enterprise value of $2.3 billion.

For the iconic American snack maker, this is the latest chapter in its comeback story. Hostess filed for bankruptcy four years ago and was taken under the wing of turnaround engineers C. Dean Metropoulos and private equity firm Apollo Global Management, who quickly moved to modernize factories, slash delivery costs and lengthen the shelf life of Twinkies.

Hostess is now seeking the public markets. The transaction will be funded with $375 million from Gores Holdings, a special purpose acquisition company sponsored by an affiliate of The Gores Group, plus another $350 million from Gores Group CEO Alec Gores, Metropoulos and other investors.
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Hostess, which was founded in 1919, was in ruins in 2012 when it was running an operating loss of $1.06 billion and was overcome by pension costs and union strikes. Apollo and Metropoulos, a self-made billionaire known for reviving brands like PAM cooking spray and Pabst Blue Ribbon, put down $410 million for the company in 2013 and got to work.
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For more on the Twinkie turnaround, read our 2015 cover story, Twinkie’s Miracle Comeback: The Untold, Inside Story of a $2 Billion Feast

[TreasonousBastard]

1. "...and lengthen the shelf life of Twinkies."

[underpants]

2. I thought that was unpossible

[sinkingfeeling]

3. Too bad nothing Hostess makes now tastes like it used to.

[mahatmakanejeeves]

4. Hostess bets on Twinkies as Pabst Blue Ribbon of junk food

Hostess bets on Twinkies as Pabst Blue Ribbon of junk food

Craig Giammona
Bloomberg

July 6, 2016, 7:47 AM

It's a playbook that worked with Pabst Blue Ribbon: Breathe new life into a moribund brand by cultivating hipster credentials. Now, the investors who helped revive Pabst beer are taking Hostess Brands public, banking on introducing a new generation of consumers to Twinkies, the company's most famous baked product.

Metropoulos & Co., the private equity firm founded by billionaire C. Dean Metropoulos, made a killing on Pabst, netting a profit of more than $450 million four years after the investment firm acquired the brewing company. Sales climbed steadily as the new owners cultivated the brand's aura, sponsoring concerts and burlesque festivals and selling PBR trucker hats and jackets. That deft marketing helped transform the light lager into the brew of choice for millions of young image-conscious American beer drinkers. Can Twinkies also be cool again?

It's a risky bet. The yellow sponge cake tube, first introduced in 1930, is an American pop-culture icon. But nostalgia for the sugar-filled, artificially colored snack may go only so far with today's health-conscious customers.

The new owners are "fighting gravitational forces in the world of food that are very different than the beer market," said Allen Adamson, former North American chairman of the branding company Landor Associates. "With Twinkies, they have to get people to consume a product that is bucking all the health trends."

[mahatmakanejeeves]

5. What Saved Hostess And Twinkies: Automation And Firing 95% Of The Union Workforce

Jul 6, 2016 @ 10:36 AM

What Saved Hostess And Twinkies: Automation And Firing 95% Of The Union Workforce

Tim Worstall
Contributor

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The most recent investors who bought it out of bankruptcy did not in fact buy “the company.” They bought just some of the assets.
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They then rationalized the production system. This is pretty much the same as stating that they automated it–or at least used different technology which amounts to the same thing. And yes, we should consider a method of organizing things to be a technology.

They went from local bakeries and delivery routes to a much more concentrated production system and delivery into warehouses. The cakes would then be delivered to retail outlets by the logistics system which delivered other products. This was aided by product changes to extend the shelf life–meaning there was extra time to use the warehousing system.

What It Took To Save the Twinkie