Public Relations

Hostess Brand Goes Public this Fall

Yep, that’s right. And not only are they going public with a new IPO that will trade as HOSTESS, but they are looking at adding new treats to their lineup.

A year or so ago, a majority stake in Hostess was sold to Gores Group (GRSHU), who has raised an additional $375 million to purchase another company or key brand with similar products. They are looking to combine the two into the new Hostess brand.

What does Hostess have going for it now, that it didn’t before it’s bankruptcy filing? Well there are a few things, and many stock analysts believe the new IPO may just be a bargain – here’s why.

Matt Kennedy, a Renaissance Capital analyst and IPO ETF manager, said, “Investors and consumers like to deal with what they know. And Americans still love fattie foods.” They also love foods that remind them of wonderful moments in their childhood and few things do that like Twinkies or Wonder Bread – both products from Hostess.

Another reason … the executive chairman of Hostess is C. Dean Metropoulos. He’s helped revive several struggling brands such as Pabst, Chef Boyardee, and Bumble Bee. With Hostess, he plans on making key acquisitions to extend Hostess’ reach – possibly into more frozen treats or bakery fresh items including his recent deal for Superior Baking. Metropoulos has also been positioning Hostess to run better with changes such as facility upgrades to the tune of $130 million, cutting the workforce, cutting bakery costs, and selling fewer brands. Annual sales may be down, but profits margins are rising.

Hostess’ Chief Exec, William Toler reports plans to increase their market share using a direct-to –warehouse distribution model and adding new products such as frozen Twinkies. They also plan to increase opportunities to sell products and brands abroad.

One interesting approach, however, is that Hostess is bucking the current trend when it comes to snack food companies going public. Almost all of the snack companies are touting healthier options and product lines. Companies such as Annie’s Inc., Amplify Food Brands, Dole Foods, and WhiteWave Foods, have entered the IPO market offering high-quality, healthy, and lower-cost foods. Obviously, no one expects that approach from Hostess.

For those interested in investing in the new IPO, they can wait until it is released, or do as many are, buy Gores Group shares now – though those prices are on the rise.

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