Hostess snacks $nagged

Hostess Brands, the maker of Twinkies and Ding Dongs, said on Tuesday it will be bought in a $725 million deal by an affiliate of private equity company Gores Group, which will then take it public.

The Missouri-based snack cake company, founded in 1919, will be acquired by Gores, a special purpose acquisition company. Including debt, the total value of the deal is about $2.3 billion, Hostess said.

The company’s products, especially the golden, cream-filled Twinkies cakes, are ingrained in American pop culture and have long been packed in children’s lunch boxes.

SPACs such as Gores Holdings have no assets but use their IPO proceeds, together with bank financing, to take companies public through acquisitions. The Hostess acquisition is expected to close by end of summer.

Hostess sold itself in 2013 to private equity firm Apollo Global and consumer industry investor C. Dean Metropoulos for $410 million.

Apollo and Metropoulos will receive shares in the combined entity worth an ownership stake of about 42 percent. Gores Holdings will pay Hostess $725 million in cash. About $173 million will be used to pay down debt.

Other investors, including Gores Group Chief Executive Alec Gores and Metropoulos, have committed $350 million through a private placement.

Metropoulos will remain executive chairman of Hostess, and William Toler will continue as chief executive.