Hostess Brands, the maker of Twinkies and Ho Hos, said an affiliate of private equity firm Gores Group will buy a majority stake in the company for about $725 million and take it public.
As part of the deal, Gores Holdings, set up by Gores to make acquisitions and other deals, will pay $375 million in cash to Hostess shareholders.
Other investors, including Gores Group Chief Executive Alec Gores and C. Dean Metropoulos, have committed $350 million through a private placement.
The current majority owners of Hostess, Apollo Global Management and Metropoulos, expect to hold a combined stake of about 42 percent in Gores Holdings upon completion of the deal.
Hostess, which has filed for bankruptcy twice in its nearly century-old history, generated sales of about $650 million in the 12 months ended May 31.
Reuters reported in July last year that the company had scrapped plans for a sale in favor of an initial public offering.
The deal with Gores is expected to close in the third quarter of 2016.
Deutsche Bank Securities Inc, Moelis & Co and Morgan Stanley were financial advisers to Gores Holdings, while Weil, Gotshal & Manges LLP was the legal adviser.
Rothschild & Co, Credit Suisse and Perella Weinberg Partners were M&A advisers to Hostess. Morgan, Lewis & Bockius was legal adviser to Apollo.
Paul, Weiss, Rifkind, Wharton & Garrison was legal adviser and UBS acted as financial adviser to C. Dean Metropoulos and his family.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Ted Kerr and Saumyadeb Chakrabarty)