Tuesday, November 20, 2012

Mitt Romney Bundler Wants to Buy Hostess

For the record.

Marc Leder, the Republican backer who hosted the fundraiser that became infamous for Mitt Romney’s comments about the 47 percent, is now interested in buying Hostess, reports Muckety.

According to Fortune, Leder’s private equity firm, Sun Capital Partners, wants to buy the bankrupt maker of Twinkies and other snack foods, and reopen its factories.

Leder and his co-CEO, Rodger Krouse, were co-chairs of the Romney campaign’s Florida finance team. They were also big donors to the super PAC working for Romney’s election.

Sun Capital is an investor in Tagg Romney’s company, Solamere Capital. Other investments include Hickory Farms, Friendly’s, and Boston Market.


  1. Good idea. You're buying some of the most recognizable brands in America for Pennies on the dollar.

  2. The interesting but sad thing about these US equity firms snatching up these distressed company's(at times) is that they can protect themselves by maintaining seperate corporate structures but then go on to leverage them up even more and pay themselves fees, and file bankruptcy. I know that's not exactly the case here...but I'm really tired reading about these guys like they are great businessmen. They are simply great at manipulating a flawed banking system.

    I really doubt this would be possible if it weren't for our flawed monetary system/federal reserve which allows for easy credit.

    I wonder how many of them would be around if they actually had to turn around companys or create effective business models.

    I'd really like to see the Bimbo group get the aquisition as they would probably turn it around with fewer crony shenanigans.

    Now that it's a political football though the odds of the "right" thing happening, especially through US gov't bankruptcy court, is probable close to zero.

    1. The easy credit helps but at the end of the day a private equity firm still needs to raise the proper amount of debt and equity and make a case to the investment banks involved that this is a worthwhile buy. The whole "buy up and screw over" mantra is a bit over-played rhetoric, as if private equity businesses continued to do that then they would really have trouble raising capital for roll-ups, angel investments, and growth capital projects.

      There is nothing wrong with the leveraged buy-out, in many cases it corrects the problem of poor management and overly-powerful unions.

    2. I'm not railing against LBO's, I'm simply making the commentary on the access to easy credit favoring those in a position to manipulate an already faulty monetary system.

      As you noted, "easy credit helps", but then you go on to say it's a "bit over-played rhetoric" on the "screw over" portion. It's an odd bit of cognitive dissonance. Not only did I not make any argument about people getting "screwed", but you are making a case against to appears to be a straw man. (that I'm against LBO's or private equity firms)

    3. edit: "what appears to be a"

    4. But you did, you specifically said that many private equity firms buy companies, leverage them up and collect fees until they are bankrupt. If you knew a bit more about the private equity business, you'd realize that this is completely untenable through incredible strict FINRA and SEC regulations, through management contracts drafted during the acquisition, and through agreements with the investment banks involved. I-banks do not like to see their stakes just vanish overnight because a Blackstone or KKR got greedy and just overleveraged a firm to get exorbitant fees before jumping ship.

      The SEC would be on them in a second, this isn't the 1980s where firms like Drexel Burnham Lambert would simply issue highly-confident letters (aka pblank promises) to huge corporate raiders and private equity firms, pump up the buy price and then jump ship once all the assets were scuttled and levered to the max.

      As I said, cheap money makes access to capital easier for anyone. However, low interest may benefit consumers, corporations, and the borrowers' in general but it doesn't necessarily benefit CERTAIN parts of banks as their margins get squeezed due to the yield curve flattening. People constantly rail against banks loving low interest rates, but the truth is that these people probably have never worked in a bank nor understand how low rates lead to tighter spreads regardless of the decreased interest expenses to depositors.

    5. *But you did, you specifically said that many private equity firms buy companies, leverage them up and collect fees until they are bankrupt.*

      Ok, let us put it this way, SOME PE firms. Ok?

      If you want to pretend this is not happening on a larger scale than would normally under hard currency feel free. Obviously that is going to be a tough sell here. Further, the SEC/FINRA stuff applies to publicly held firms.

      Everything else you wrote is obvious and superfluous.

  3. Just a quick question - are you still going to tweet all your posts on Twitter? I've noticed that a lot of your posts don't show up on Twitter anymore (or if they do, then with a serious delay).

  4. If the sale goes thru and things go badly, he will always have the Twinkie defense to explain why he did it.

  5. The key for this pe firm and others bidding for Hostess is there are no unions bundled with the Twinkies.