Bloomberg's Giammona on Hostess Brands Plan for an IPO (Audio)

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Bloomberg business flash. You're listening to taking stock with pin Box and Kathleen Hayes on Bloomberg Radio. Do you remember what was it about three years ago when the shocking news crossed the Bloomberg that the hostess Twinkie might be on its way out of existence, Well, maybe not out of the way of existence. But it was facing uh bankruptcy, it was facing restructuring, and this iconic brand, in fact, was very close to extinction before it was purchased by

Apollo Global Management and investor Dean Metropolis. And now we're seeing Twinkies Baker Hostess to go public in a deal with a very important investor. We're very happy to welcome to the show Craig Gemona. He is a Bloomberg consumer reporter and he wrote a terrific story about Twinkies today, So remind us what happened to Twinkies. It looked like it was on the verge of extinction, but it just didn't seem possible. Even if they're filled with sugar and

not good with you. So many people grew up with them. What happened, that's right, Well, they felt they've gott into trouble twice in the last ten years. I think once in two thousand nine, they emerged from bankruptcy only to file again. You know about three years later they were

actually Twinkies were office else for about seven months. You know, there was sort of the Facebook pages happened where Twinkies purchased, like you said, and brought back to the market, and now they're here and saying, basically, we've done pretty well with it. They did what a private equity guys do. They trimmed up the company, the workforces way down, they consolidated the factories, and they're saying basically that they're back,

new and improved and they're ready to go public. Well, you just mentioned something about the cuts that were implemented as a result of the acquisition. Uh, this was also a union issue, if I'm not mistaken, that's right. So I think it's something I was looking at the presentation. They discussed it this afternoon, something like eight thousand workers down to twelve hundred, most of those union jobs. So they cut out the costs. Again, that's the private equity

guys do. They said, you know, very fascinating point. They increased the shelf life of their products from twenty five to sixty five days, so Twinkies now can apparently last longer than they could prior. And it's actually a myth that Twinkies can you know, sustain nuclear attacks or whatever the stories have been. But basically these guys are saying, you know, we're doubling down on indulgence. We're not worried

about the headwinds. Millennials don't want sugar process sugar. We think the Twinkies are an iconic brand and we're gonna put it at the forefront of this new public company. So the snowball survived too, and the cupcakes. That's right. And you know, that's the funny thing that they're not talking about gluten free organic. They're basically saying that, uh, like you you remember it from childhood. There's nostalgia around this brand, and maybe younger consumers like a good, authentic

American story. It's an iconic brand with a lot of brand equity, and you know, we think we can sell more of this stuff. Great. Looking at a little bit of the details of the acquisition and Mr Metropolis, he's got a hand in a variety of different businesses. For example, I believe he owns the Paps Brewing he did he sold, so it's interesting. Paps is a great example. You know, he did with perhaps what I think they want to do with Twinkies, right with Paps. Uh, he took it,

he sort of gave it. They gave it some hipster credentials. They ran with that, and you know, perhaps more than doubled over the last decade of sales. It's it's well, really well known, so maybe there's a chance to do that with Twinkies. This sugar question and the remains it doesn't. It is a time when people are realizing that excess sugar consumption can kind of make a train doing a diabetic, make it gain weight, all kinds of things. Uh so,

what are the odds of overcoming that? I mean, I don't need a lot of sugar, I figured, but eve a little bit of sugar. Not it's not so bad. It's just when people constantly consume, is there is there a niche or for them? Do you think? I'm not sure. I mean, people eat differently now than they did in the fifties, sixties, seventies, and you know there's no question that right now sugar is the health boogeyman. Probably number one.

People know what's good reason that's right, And the FDA want is gonna is trying to make the companies call out added sugar on the label. So everything sort of that we know about health trends and eating trends would point against headwinds for a company that is, like I said, doubling down on sweetendulgers. They want to sell baked sugar, process sugar, these kind of products. You know, there's brand strength there, but no question that consumers have moved away

from this type of thing. Any talk about valuation for Hostess, you know they were taught it's reasonable, is what I heard so far. I mean, we haven't really gotten the number out there. A lot of people obviously trying to figure that out. I think it will be on the smaller side. It's not gonna be a blockbuster, I p o. But because of the names involved, I think a lot

of attention to it. Again. You know, Metropolis has had some success turned around paths and now here they are involved with Pinnacle Foods, and I believe that Bill Taller, who is the chief executive of Hostess, is originally from Pinnacle Foods. That's right. So a lot of things I heard today is about these guys know how to execute.

There's good gross margins and and bread and baked goods like that if they can execute so and like I said, when you're looking at the financials that they put out there today, sort of a bare bones, but they have really cut the fat out of what Hostess used to be, but not the sugar just right, So Craig, go real quickly here, your food and reporter, what's on your horizon? One of the one of the next big stories you're following. Obviously, the Hershei Mondoles thing was got a lot of people

talking last week. Her She quickly came out and said that, um, you know, they rejected the deal, but every one had kind of been waiting for food deals to perk back up again. Was a huge year with Kraft, Heins and you know Buffet getting together with those guys to do that deal. There's a lot of consolidation because of what you're talking about. These uh CpG companies have had a hard time with changing consumer taste, so was off to

a slow start. We got the Mondols Hershey news now this, so there's a sign maybe that food deal making is going to pick up here. Thanks for spending time with us. Craigmona is food and restaurant reporter for Bloomberg News. Talking about Hostess and it's impending initial public offering. Talking about Hersheet that shares it down about a tens of a percent. Today, you're listening to taking Stock. I'm pim Fox. My co

host Kathleen Hayes, and this is Bloomberg Cybersecurity. How about tracking the emotions, the emails of people that work for you to head off cyber attacks in the making. That's coming up right now on Bloomberg Radio. This is Bloomberg