Transaction Introduces Hostess as a Publicly
Listed Company
Hostess Brands, LLC (“Hostess” or the “Company”), the maker of
Hostess® Twinkies®, Ding Dongs® and CupCakes, announced it has
entered into a definitive agreement with Gores Holdings, Inc.
(“Gores Holdings”) (NASDAQ CM: GRSHU, GRSH, GRSHW), a special
purpose acquisition company sponsored by an affiliate of The Gores
Group, LLC (“The Gores Group” or “Gores”). This transaction will
introduce Hostess as a publicly listed company, with an anticipated
initial enterprise value of approximately $2.3 billion or 10.4x the
Company’s estimated 2016 Adjusted EBITDA of approximately $220
million.
Along with the $375 million of cash held in Gores Holdings’
trust account, additional investors have committed to participate
via $350 million private placement, led by Alec Gores, Chairman and
CEO of The Gores Group, and comprising large institutional
investors, C. Dean Metropoulos (via $50 million of additional
rollover contribution), and Gores affiliates.
Funds managed by affiliates of Apollo Global Management, LLC
(together with its consolidated subsidiaries, “Apollo”) (NYSE: APO)
and C. Dean Metropoulos and family, the current majority owners of
Hostess, expect to hold an approximately 42% combined stake in
Gores Holdings upon completion of the transaction. Dean Metropoulos
and William Toler will continue to lead the Company as Executive
Chairman and Chief Executive Officer, respectively. This
transaction better enables Hostess to continue executing on its
long-term growth plan by providing greater access to capital to
fund future innovation and acquisitions.
“I have enjoyed working together with Apollo to build a vibrant
and exciting company, and we are pleased to partner with the Gores
Holdings team as we move to the next stage of Hostess' growth and
expansion,” stated Dean Metropoulos. “We look forward to continuing
both our strong organic growth through unique innovations and
niche, strategic acquisitions, such as our recent acquisition of
Superior Baking, which will extend Hostess' consumer reach in
the ‘in-store bakery’ market and expand offerings to
customers.”
“This new phase in Hostess' evolution and partnership with The
Gores Group and our broader investor partners will continue to
propel Hostess into a growing and innovative company with
significant reach and potential long into the future,” he added.
“We are very excited to continue to build this wonderful company
and its iconic brands.”
Alec Gores, Chairman and CEO of The Gores Group, 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 capitalize on these attractive growth prospects.”
Andy Jhawar, Senior Partner and Head of the Consumer and Retail
Group at Apollo, said, “We are extremely proud of all that we have
accomplished together since we acquired these assets out of
liquidation in 2013 and rebuilt the company into the great platform
business it is today. Hostess possesses exciting continued organic
top-line growth potential and is one of the highest EBITDA margin
and cash generative food platforms in the U.S. We look forward to
continuing our partnership with Dean and Bill, along with the team
at Gores, to further grow and build Hostess.”
Hostess was founded in 1919 with the introduction of the Hostess
CupCake to the American public. In 1930, Twinkies were introduced,
which was an event many say changed the snack cake world. Today,
Hostess Brands produces a variety of new and classic treats
including Ding Dongs®, Ho Hos®, Donettes® and Fruit Pies, in
addition to Twinkies and CupCakes. Hostess had revenues for the
twelve months ended May 31, 2016 of approximately $650 million and
operates three baking facilities located in Emporia, KS,
Indianapolis, IN and Columbus, GA. The Company has a competitively
advantaged business model and Direct-to-Warehouse distribution
system, and an experienced management team with a successful track
record in both relaunching and growing businesses.
Key Transaction Terms
The transaction will be effected pursuant to the Master
Transaction Agreement entered into by and among Gores Holdings, the
sellers and the other parties thereto. Concurrently with the
consummation of the transaction, additional investors will purchase
shares of common stock of Gores Holdings in a private placement.
After giving effect to any redemptions by the public stockholders
of Gores Holdings, the balance of the approximately $375 million in
cash held in Gores Holdings’ trust account, together with the $350
million in private placement proceeds (which include $50 million of
additional rollover consideration from C. Dean Metropoulos), will
be used to pay the sellers cash consideration, pay transaction
expenses and repay a portion of the Company’s existing indebtedness
to 4.5x 2016 Adjusted EBITDA. The remainder of the consideration
payable to the sellers will consist of shares of Gores Holdings
common stock.
In order to facilitate the transaction, Gores Holdings’ sponsor
has agreed to the cancellation of a portion of the 9,375,000
founder shares and the acquisition of shares of common stock of
Gores Holdings by the sellers under the Master Transaction
Agreement and in the private placement at a discount. In addition,
the shares of Gores Holdings common stock received by the sellers
in the transaction (other than certain rollover shares held by C.
Dean Metropoulos) will be restricted from trading for at least 180
days following the completion of the transaction.
As part of the transaction, Gores Holdings will also enter into
a tax receivable agreement with the sellers, which will provide for
the sharing of tax benefits relating to pre-transaction combination
tax attributes and tax attributes generated by the transaction as
those attributes are realized by Gores Holdings.
The transaction has been unanimously approved by the boards of
directors of both Gores Holdings and Hostess, and is expected to
close in the third quarter of 2016, subject to the receipt of
regulatory approval, and approval of the stockholders of Gores
Holdings. Upon closing of the transaction, the name of the Company
will be changed to Hostess Brands, Inc.
Deutsche Bank Securities Inc. acted as lead capital markets
advisor, along with Moelis & Company and Morgan Stanley, and
financial advisor and Weil, Gotshal & Manges LLP acted as legal
advisor to Gores Holdings. Rothschild & Co., Credit Suisse and
Perella Weinberg Partners acted as M&A advisors to Hostess.
Morgan, Lewis & Bockius acted as legal advisor to Apollo. Paul,
Weiss, Rifkind, Wharton & Garrison acted as legal advisor and
UBS acted as financial advisor to C. Dean Metropoulos and his
family.
Conference Call Information
At 1:00 pm EDT on July 5, 2016, Gores Holdings will be holding
an investor conference call to discuss the transaction. For those
who wish to participate, the domestic toll-free access number is
(855) 729-4767 and the international toll-free access number is
(615) 489-8573. Once connected with the operator, please provide
the Conference ID number of 42925543 and request access to the
Gores Holdings and Hostess Brands Investor Call.
A replay of the call will also be available from 5:00 pm EDT on
July 5, 2016 to 11:59 pm EDT on July 12, 2016. To access the
replay, the domestic toll-free access number is (866) 247-4222 and
participants should provide the Conference ID number of 42925543
and request access to the Gores Holdings and Hostess Brands
Investor Call.
About Hostess Brands, LLC
Hostess Brands, LLC is one of the largest packaged food
companies focused on developing, manufacturing, marketing, selling
and distributing fresh baked sweet goods in the United States. For
more information about Hostess products and Hostess Brands, LLC,
please visit hostesscakes.com. Follow Hostess on Twitter:
@Hostess_Snacks; on Facebook: facebook.com/Hostess; on Instagram:
Hostess_Snacks; and on Pinterest: pinterest.com/hostesscakes.
About Gores Holdings, Inc.
Gores Holdings is a special purpose acquisition company
sponsored by an affiliate of The Gores Group, for the purpose of
effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with
one or more businesses. Gores Holdings completed its initial public
offering in August 2015, raising approximately $375 million in cash
proceeds. Gores Holdings’ officers and certain of its directors are
affiliated with The Gores Group. Founded in 1987 by Alec Gores, The
Gores Group is a global investment firm focused on acquiring
controlling interests in mature and growing businesses which can
benefit from the firm's operating experience and flexible capital
base. Over its 25 year history, The Gores Group has become a
leading investor having demonstrated a reliable track record of
creating value in its portfolio companies alongside management.
Headquartered in Los Angeles, The Gores Group maintains offices in
Boulder, CO, and London. For more information, please visit
www.gores.com.
About Apollo
Apollo (NYSE: APO) is a leading global alternative investment
manager with offices in New York, Los Angeles, Houston, Chicago,
Bethesda, Toronto, London, Frankfurt, Madrid, Luxembourg,
Singapore, Mumbai, Delhi, Shanghai and Hong Kong. Apollo had assets
under management of approximately $173 billion as of March 31,
2016, in private equity, credit and real estate funds invested
across a core group of nine industries where Apollo has
considerable knowledge and resources. For more information about
Apollo, please visit www.agm.com.
About Metropoulos & Co.
Metropoulos & Co. is a merchant banking and management firm
focused principally on the food and consumer sectors in the United
States and Europe. C. Dean Metropoulos and his management team
partners have been involved in more than 81 acquisitions with over
$12 billion of aggregate transaction value. Companies where
Metropoulos & Co. has been an investor and Metropoulos has been
an executive include: Pabst Brewing Company, Pinnacle Foods, Aurora
Foods, Stella Foods, The Morningstar Group, International Home
Foods, Ghirardelli Chocolates, Mumm and Perrier Jouet Champagnes
and Hillsdown Holdings, PLC (Premier International Foods, Burtons
Biscuits and Christie Tyler Furniture), among others.
Forward-Looking Statements
This press release may contain a number of “forward-looking
statements” as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements include information
concerning Gores Holdings’ or Hostess’ possible or assumed future
results of operations, business strategies, competitive position,
industry environment, potential growth opportunities and the
effects of regulation, including whether this transaction will
generate returns for stockholders. These forward-looking statements
are based on Gores Holdings’ or Hostess’ management’s current
expectations, estimates, projections and beliefs, as well as a
number of assumptions concerning future events. When used in this
press release, the words “estimates,” “projected,” “expects,”
“anticipates,” “forecasts,” “plans,” “intends,” “believes,”
“seeks,” “may,” “will,” “should,” “future,” “propose” and
variations of these words or similar expressions (or the negative
versions of such words or expressions) are intended to identify
forward-looking statements. These forward-looking statements are
not guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
Gores Holdings’ or Hostess’ management’s control, that could cause
actual results to differ materially from the results discussed in
the forward-looking statements. These risks, uncertainties,
assumptions and other important factors include, but are not
limited to: (1) the occurrence of any event, change or other
circumstances that could give rise to the termination of the Master
Transaction Agreement and the proposed business combination
contemplated thereby; (2) the inability to complete the transaction
contemplated by the Master Transaction Agreement due to the failure
to obtain approval of the stockholders of Gores Holdings or other
conditions to closing in the Master Transaction Agreement; (3) the
ability to meet NASDAQ’s listing standards following the
consummation of the transaction contemplated by the Master
Transaction Agreement; (4) the risk that the proposed transaction
disrupts current plans and operations of Hostess as a result of the
announcement and consummation of the transaction described herein;
(5) the ability to recognize the anticipated benefits of the
proposed business combination, which may be affected by, among
other things, competition, the ability of the combined company to
grow and manage growth profitably, maintain relationships with
customers and suppliers and retain its management and key
employees; (6) costs related to the proposed business combination;
(7) changes in applicable laws or regulations; (8) the possibility
that Hostess may be adversely affected by other economic, business,
and/or competitive factors; and (9) other risks and uncertainties
indicated from time to time in the final prospectus of Gores
Holdings, including those under “Risk Factors” therein, and other
documents filed or to be filed with the Securities and Exchange
Commission (“SEC”) by Gores Holdings.
Forward-looking statements included in this release speak only
as of the date of this release. Neither Gores Holdings nor Hostess
undertakes any obligation to update its forward-looking statements
to reflect events or circumstances after the date of this release.
Additional risks and uncertainties are identified and discussed in
Gores Holdings’ reports filed with the SEC and available at the
SEC’s website at www.sec.gov.
Additional Information about the Business Combination and
Where to Find It
Gores Holdings intends to file with the SEC a preliminary proxy
statement of Gores Holdings in connection with the proposed
business combination and will mail a definitive proxy statement and
other relevant documents to its stockholders. This press release
does not contain all the information that should be considered
concerning the business combination. It is not intended to provide
the basis for any investment decision or any other decision in
respect to the proposed business combination. Gores Holdings’
stockholders and other interested persons are advised to read, when
available, the preliminary proxy statement, the amendments thereto,
and the definitive proxy statement in connection with Gores
Holdings’ solicitation of proxies for the special meeting to be
held to approve the business combination, as these materials will
contain important information about Hostess and Gores Holdings and
the proposed business combination. The definitive proxy statement
will be mailed to the stockholders of Gores Holdings as of a record
date to be established for voting on the business combination. Such
stockholders will also be able to obtain copies of the proxy
statement, without charge, once available, at the SEC’s website at
http://www.sec.gov, or by directing a request to: Gores Holdings,
9800 Wilshire Boulevard, Beverly Hills, CA 90212, attention:
Jennifer Kwon Chou (jchou@gores.com).
Participants in the Solicitation
Gores Holdings and its directors and officers may be deemed
participants in the solicitation of proxies of Gores Holdings
stockholders in connection with the proposed business combination.
Gores Holdings stockholders and other interested persons may
obtain, without charge, more detailed information regarding the
directors and officers of Gores Holdings in Gores Holdings’ Annual
Report on Form 10-K for the fiscal year ended December 31, 2015,
which was filed with the SEC on March 16, 2016. Information
regarding the persons who may, under SEC rules, be deemed
participants in the solicitation of proxies to Gores Holdings
stockholders in connection with the proposed transaction will be
set forth in the proxy statement for the transaction when
available. Additional information regarding the interests of
participants in the solicitation of proxies in connection with the
proposed transaction will be included in the proxy statement that
Gores Holdings intends to file with the SEC.
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For inquiries regarding The Gores Group and affiliates,
please contact:The Gores GroupJennifer Kwon ChouManaging
Director, Head of Investor
Relations310-209-3010jchou@gores.comorSitrick & CompanyMike
Sitrick310-432-4150Mike_Sitrick@sitrick.comorFor investor
inquiries regarding Apollo Global Management, please
contact:Apollo Global Management, LLCGary M. SteinHead of
Corporate Communications212-822-0467gstein@apollolp.comorApollo
Global Management, LLCNoah GunnInvestor Relations
Manager212-822-0540ngunn@apollolp.comorFor media inquiries
regarding Apollo Global Management, please contact:Rubenstein
Associates, Inc. for Apollo Global Management, LLCCharles
Zehren212-843-8590czehren@rubenstein.comorFor media inquiries
regarding Hostess Brands, Dean Metropoulos or Metropoulos &
Co., please contact:LAK Public Relations, Inc.Hannah
Arnold212-575-4545harnold@lakpr.com
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