12 Jul Twinkie Maker Going Public with SPAC Merger

Hostess Brands LLC, which makes the iconic Twinkies, cupcakes, Ding Dongs and others, is going public by merging with a public “shell” vehicle known as a special purpose acquisition company, or SPAC. Current owners Apollo Global Management and others will give up control but retain about 42% ownership, according to the PIPEs Report. Add this to the higher profile SPAC deals of the past such as American Apparel and Jamba Juice, which both took advantage of the ready cash and exchange listing that a SPAC provides without a traditional IPO.

The PIPEs Report also tells us there are currently there are about 31 SPACs that are public and trading and waiting on deals, and another 15 in registration hoping to get public. Cantor Fitzgerald, Citigroup, Chardan Capital Markets, Ladenburg Thalmann, Maxim Group and Deutsche Bank are the main underwriters in the space. So SPACs are doing fairly well, though they are not as prolific as in their prior heyday leading up to 2008.

We also learn from this week’s PR that reverse mergers other than SPACs are rapidly dwindling. This is a direct result of the SEC’s passage of rules in 2011 requiring those merging with trading shells to trade in the over-the-counter market for a year before uplisting. SPACs are different because they start trading on a national exchange. In 2010 there were 256 reverse mergers, but in 2015, only 79. And this year only 24 through the first half of the year. Luckily, Regulation A+ is stepping up as a valuable alternative for smaller companies that would have considered shell mergers before the 2011 rule changes. With the market hitting record highs, there’s always another way!