Is Hostess Up for Sale?

Reports surface about snack company weighing its options

8/31/2023

Hostess Brands, maker of the popular Twinkies snacks, is reportedly considering a sale.

Legacy snack food business Hostess Brands, Inc. may be looking for a sweet deal. According to a report this week, the Lenexa, Kan.-based company is considering a sale, with potential buyers including heavy hitters like Mondelēz International, General Mills, PepsiCo and The Hershey Co.

According to the Reuters news service, interest in acquiring Hostess came after the company raised prices on some of its products in a reported bid to increase its revenue. The unnamed source cited by Reuters revealed that the company brought in investment bank Morgan Stanley to provide guidance but also emphasized a merger or acquisition is not certain.

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The value of Hostess includes its iconic Twinkies, Ho-Hos, Ding Dongs, Cup Cakes, Snoballs, Zingers and Voortman product lines. After filing for bankruptcy in 2004 and 2012, the company turned things around, reporting a third straight year of double-digit net revenue growth in 2022 and launching innovations like a new line of Kazbars, Donettes, Baby Bundts and Voortman Zero Sugar Mini Wafers.

For the second quarter ending June 30, Hostess reported a 3.5% boost in revenue from the prior year to hit $352.4 million, an 11.8% lift in gross profit to top $126 million and a 16.1% gain in adjusted EBITDA. Also this summer, the company announced that it had refinanced its First Lien Credit Agreement, including a $983 million term loan due in August 2025 and a $100 million revolving line of credit due in August 2024.

“We believe we continue to be well-positioned for attractive shareholder returns as we build a premier, pure-play snacking company,” said President and CEO Andy Callahan, following the Q2 earnings report. “Given our strong first-half performance, we are raising our full-year adjusted EBITDA and adjusted EPS guidance toward the higher end of our previous range, delivering above long-term algorithm profit growth in 2023.”

After news about a potential sale emerged, shares of Hostess Brands rose 26% in trading with a "bullish" outlook among investors.