Hostess Brands won’t sell: It is ‘premature’ to consider offers

By Kacey Culliney contact

- Last updated on GMT

Hostess Brands believes it can strengthen brands like Ding Dongs further
Hostess Brands believes it can strengthen brands like Ding Dongs further

Related tags: Initial public offering, Venture capital

Hostess Brands has turned down buy-out and initial public offering (IPO) proposals as it believes it can continue to strengthen its brands.

Last month, rumors surfaced that Metropoulos & Co and Apollo Global Management were considering selling Hostess​, with Grupo Bimbo, Flowers Foods, Post and Aryzta all cited as alleged suitors.

Hostess Brands has confirmed to BakeryandSnacks.com that it did receive offers for both the sale of the company and an IPO but said a transaction was not on the cards.

“At this time, it is premature to consider either alternative. Hostess has experienced a tremendous turnaround in the past two years and we are excited to continue to build upon the strong growth of these iconic American brands,” ​it said in a statement.

Hostess Brands' range of packaged cake brands include, Twinkies, Ding Dongs, Zingers and Donnettes, among others.

A surprise?

Lamine Lahouasnia, head of packaged food research at Euromonitor International, said the decision to hold off on a sale was no real surprise.

“Definitely not - I remember being quite surprised when the initial reports came out that Hostess was allegedly back on the market,”​ he said.

However, he added that the decision not to sell was not necessarily a change of plan for the company.

Hostess_cake_brands

“The owners of Hostess were approached with tempting offers and after seeing what other companies were prepared to pay, decided that there must be further that they can take the company.

“It must be a huge boost of confidence for the owners and confirms that they are taking the business in the right way, at least from a financial perspective,” ​he said.

It’s risky…

However, Lahouasnia warned the decision to focus on growth rather than selling could be “potentially risky” ​for Hostess Brands.

“The owners of Hostess would have made a very good return if they had cashed out last month, even by private equity standards,” ​he said.  “Yes, they could get more by developing the business but that success is by no means guaranteed and even if the business does continue to develop, the buyers may simply no longer be interested.”

Rumors last month of the sell-out pegged a full sale at around $2bn – the two private equity firms Metropoulos and Apollo paid just $410m for the Hostess assets back in 2013​.

Related topics: Cakes & Pastries, Manufacturers

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