Hostess, which produces Twinkies and other similar treats, announced plans to go public amid an agreement with Gores Group LLC. According to reports, Gores recently confirmed plans to acquire the popular snack-cake company in a $725 million deal.
The Wall Street Journal reports Apollo Global Management and Metropoulos & Co., which currently own the company, will retain a 42 percent combined stake and William Toler will continue to serve as executive chairman. Gores’ acquisition and Hostess’ decision to go public are expected to ensure long-term growth and stability.
Founded by the Interstate Baking Company in 1925, Hostess brand introduced their Twinkie snack cake in 1930. As reported by Seattle Times, the cream-filled sponge cake was invented by James Dewar in an attempt to provide customers with an inexpensive and tasty treat during the Great Depression.
Over the next 17 years, Hostess also introduced Sno Balls, which are cream filled cakes topped with marshmallow and coconut flakes, and two varieties of cream-filled chocolate cakes called Ding Dongs and HoHos.
Between 1925 and 1995, Interstate acquired numerous baking companies, including Continental Baking Company, Kingston Cake Bakery, Schall Tasty Baking Company, and Supreme Baking Company. However, over the next 10 years, the popular snack-cake company began experiencing financial woes.
In 2004, Interstate Bakeries was forced to file for Chapter 11 bankruptcy protection. Although the company emerged from bankruptcy in 2009, under the name Hostess Brands, the snack-cake giant continued to struggle.
Hostess, 4 years after bankruptcy, will go public again https://t.co/tTk6faBdvY pic.twitter.com/BhlfAnb579
— ABC7 Eyewitness News (@ABC7) July 5, 2016
By the end of 2011, Hostess stopped contributing to their employees’ future pension funds. As a result, the company was charged with violating union contracts.
Two months later, Hostess filed for Chapter 11 bankruptcy protection once again. By the end of 2012, the company halted production of their popular snack cakes and laid off an estimated 18,000 employees.
— Forbes (@Forbes) July 5, 2016
As reported by CNBC, the news sparked a panic. Within hours of the announcement, Twinkie fans rushed to their local grocery stores to purchase the last of the popular snack cakes. As many outlets were completely wiped out, the products were being offered by private sellers on eBay and Craigslist for up to thousands of dollars per package.
In March 2013, ABC News reported Apollo Global Management, LLC and Metropoulos & Co. purchased the Hostess and Dolly Madison brands, five bakeries, and equipment necessary to produce the company’s most beloved products for an estimated $410 million.
Although the company reinstated the production of Hostess products, including the Twinkie, the processes were streamlined to save money and to ensure continued success.
In an effort to secure long-term growth and stability, a majority of the company will be acquired by an affiliate of Gores Group LLC, and Hostess will go public.
Although in recent years, Hostess has become known for their financial problems. In 2003, the company also gained national attention for the so-called “Twinkie defense” claimed by a California man named Dan White.
On November 17, 1978, White opened fire inside a San Francisco government building killing then-Mayor George Moscone and Supervisor Harvey Milk.
During his trial, Dan White’s legal team argued that their client “suffered from periodic bouts of depression,” which qualified as “a major mental illness.” The attorneys reportedly blamed the defendant’s depression on his consumption of copious amounts of junk food.
SFGate reports, there are conflicting accounts as to whether Twinkies were specifically mentioned during testimony. However, other Hostess products, including Ding Dongs and HoHos were specifically discussed, according to chief defense attorney Douglas Schmidt.
When the jury returned their verdict, the community was stunned that Dan White was convicted of manslaughter as opposed to first-degree murder. The lighter conviction and subsequent sentence of seven years in prison were blamed on the “Twinkie defense,” although White’s defense team insists their strategy was actually based on California’s “diminished capacity” law — not snack cakes.
Hostess’ decision to go public is only the latest in a string of attempts to save the popular snack cake company. Despite the ongoing financial issues, the company reported a revenue of nearly $650 million during the fiscal year ending May 31.
[Image via Ramon Antinolo/Shutterstock]