Hostess Brands signs definitive agreement with Gores Holdings

US-based food company Hostess Brands has signed a definitive agreement with Gores Holdings, a special purpose acquisition company backed by an affiliate of The Gores Group.

This deal will see Hostess being launched as a publicly listed company, with an estimated initial enterprise value of approximately $2.3bn.

In addition to $375m of cash held in Gores Holdings’ trust account, others investors have committed to participate through $350m private placement, led by The Gores Group chairman and CEO Alec Gores.

Following the deal’s closure, funds managed by affiliates of Apollo Global Management and C. Dean Metropoulos and family, the present majority owners of Hostess, will hold around 42% combined stake in Gores Holdings.

Dean Metropoulos will continue to lead the firm as executive chairman and William Toler as CEO.

This deal will enable Hostess to implement its long-term growth plan as it will have greater access to capital to fund future innovation and acquisitions.

Alec Gores said: "We are pleased to partner with Dean, Bill and Apollo to introduce Hostess as a publicly listed company.

"We have evaluated a number of potential acquisitions for Gores Holdings and believe this transaction offers a superior option for our stockholders.

"Hostess presents a unique opportunity to invest in an iconic brand with strong fundamentals that is poised for continued growth.

"We look forward to working with the team at Hostess as we collaborate to further capitalise on these attractive growth prospects."

Hostess owns brands including Hostess Twinkies, Ding Dongs and CupCakes.

Set up in 1919, it operates three baking facilities in Emporia, Indianapolis and Columbus and posted revenues of $650m in fiscal year 2015.