Metropoulos & Co. and Apollo bought Twinkies and other Hostess cakes for $410 million.
Apollo Global Management, founded by Leon Black, is known for buying troubled brands then selling them for a profit; its investments include fast-food chains Carl's Jr. and Hardee's. Metropoulos & Co., which has revamped then sold off brands including Chef Boyardee and Bumble Bee, also owns Pabst Brewing Co.
The trimmed-down Hostess Brands LLC has a far less costly operating structure than the predecessor company. Some of the previous workers were hired back, but they're no longer unionized.
Hostess will also now deliver to warehouses that supply retailers, rather than delivering directly to stores, said Rich Seban, the president of Hostess who previously served as chief operating officer. That will greatly expand its reach, letting it deliver to dollar stores and nearly all convenience stores in the U.S.Previously, he said Hostess was able to reach only about a third of the country's 150,000 convenience stores. Production was also consolidated, from 11 bakery plants to four -- one each in Georgia, Kansas, Illinois and Indiana. The headquarters were moved from Texas to Kansas City, Mo., where Hostess was previously based and still had some accounting offices. In the months since they vanished from shelves, the cakes have been getting a few touchups as well. For the CupCakes, the company is now using dark cocoa instead of milk chocolate to give them a richer, darker appearance. Seban stressed that the changes were to improve the cakes, not to cut costs. Prices for the cakes will remain the same; a box of 10 Twinkies will cost $3.99. Looking ahead, Seban sees Hostess expanding its product line. He noted that Hostess cakes are known for three basic textures: the spongy cake, the creamy filling and the thicker icing. But he said different textures -- such as crunchy -- could be introduced, as well as different flavors. "We can have some fun with that mixture," he said. He also said there were many trendy health attributes the company could tap into, like gluten-free, added fiber, low sugar and low sodium.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts