A Beverly Hills billionaire is teaming up with other investors to buy Hostess — maker of such snacks as Twinkies and Ding Dongs — for $2.3 billion.
Alec Gores is the founder and chief executive of Beverly Hills private equity firm Gores Group. Hostess’ current owners — billionaire food magnate C. Dean Metropoulos and New York private equity firm Apollo Global Management — announced Tuesday they would sell a controlling stake in the snack-cake maker to Gores Holdings, a shell corporation created in August with the express purpose of buying a company with growth prospects.
Though Hostess will be its own public company after the deal, Gores Group, Apollo and Metropoulos will all own big stakes, the Los Angeles Times reported. Gores’ firm will control some of the company’s board seats and Metropoulos will serve as Hostess’ chairman.
Gores Group created Gores Holdings in August, raising $375 million in a public offering, according to The Times. Gores said the firm looked at about 30 companies before settling on Hostess as its acquisition target.
He said the baking company, which has gone through a long list of owners over its nearly 100-year history and which went through bankruptcy twice in less than 10 years, is now a healthy business, and one that still has plenty of upside, according to The Times.
“It’s a very stable business that does as well in a bad economy as in a good one,” Gores said in remarks reported by The Times. “They have amazing margins, and they have room to grow.”
—City News Service