ICYMI – Private Equity is “Why the Twinkie Is Now Worth Billions”
WSJ highlights how private equity revived one of America’s most iconic snack brands
Recently, the Wall Street Journal published a story highlighting the critical role private equity played in supporting the comeback of iconic baked goods company and Twinkie manufacturer, Hostess Brands. The story details how Hostess struggled to stay afloat amidst American consumers’ shifting taste and preferences for healthier snacks. Private equity firms stepped in and helped the company modernize its operations and bring one of America’s most iconic brands and products back to grocery store shelves nationwide.
Key excerpts from the story are included below and to read the full article from the Wall Street Journal, please click here.
Investment Firms Rescued the Snack Cakes
- “Hostess Brands, maker of the golden, cream-filled sponge cake, declared bankruptcy for the second time in a decade. The company closed its factories and began liquidation proceedings, sparking a run on supermarkets as shoppers filled their carts with Twinkies, Ho Hos and other edible specimens of Americana they thought they might never be able to buy again. What happened next was a dramatic comeback that few could have anticipated. Two investment firms rescued the snack cakes, paying $410 million for Hostess’s brands and kicking off a decadelong fix-up job. Then came a dogged quest for efficiency and a determined search for the next Twinkie, all of which culminated this week in a deal to sell Hostess to J.M. Smucker for $4.6 billion.
“Sweetest Comeback in the History of Ever”
- “During their absence, private-equity firms Apollo Global Management and Metropoulos & Co., teamed up on a $410 million offer for most of the Hostess cake business, winning a 2013 auction without a challenge from other bidders. They took over a company free of union contracts and debt—and brought the most recognizable Hostess product back to shelves. They dubbed the triumphant return of Twinkies as the “sweetest comeback in the history of ever.” Hostess was still racing to keep up with orders when the investment firms hired Toler, a veteran food-industry executive, as Hostess’s CEO in 2014.
Private Equity Drove Innovation
- “Hostess’s owners also began churning out new products, including limited-edition items timed to coincide with cultural events, such as Twinkies filled with “key lime slime” launched to celebrate the release of a new “Ghostbusters” movie in 2016.”
