- Metropoulos family-owned Round Hill Investments bought New England Confectionery Co., maker of Necco Wafers, for $17.3 million at a bankruptcy auction on Friday, according to The Wall Street Journal.
- Spangler Candy Co., which makes Dum Dum lollipops, had submitted the highest bid at the auction, pledging to pay $18.83 million for the company. However, after winning the bid, Spangler told the bankruptcy trustee it could not complete the sale unless it received a discount. None was given, and the sale fell apart. The company went instead to the second highest bidder.
- The Metropoulos family has a long track record of reinvigorating iconic food brands. They are best known for bringing Hostess back from bankruptcy — acquiring the maker of Twinkies and Ho Hos in 2013, and bringing the company back to IPO in November 2016. The Metropoulos family has also invested in troubled brands including Utz, Chef Boyardee, Pabst Blue Ribbon, Bumble Bee and Vlasic.
It's hard to say who got the biggest sweetheart of a deal in this transaction. The iconic maker of Sweethearts, Necco Wafers and Clark Bars is escaping bankruptcy by being purchased by a family with an excellent track record of reinvigorating brands on the road to ruin. Meanwhile, the Metropoulos group has another chance to show off its skills in rebuilding a brand that has been both vilified and truly loved. While a sale to Spangler would have utilized efficiencies through confectionery expertise, plants and distribution, the Ohio-based company may not have been able to give Necco the attention it needs.
While Necco is the Metropoulos family's first foray into confectionery, it's highly likely that the group will be following a similar strategy to what's worked at other food companies. The family is already using a page out of its successful playbook, acquiring the company under the name Sweetheart Candy — the most beloved item it makes.
Necco CEO Mike McGee told Greenwich Time that the company is excited to have the family's support and wisdom to rebuild.
McGee suggested that the family could acquire other brands to help rebuild the company as a candy powerhouse. Necco, which made its first candies in 1847, already has a stable of brands, including Clark Bars, Squirrel Nut Zippers and Mary Janes. None of these are as popular as the wafers and Valentine's day hearts, but with some updating and attention, they could become consumer favorites.
As news surfaced that Necco was facing bankruptcy, the candy's popularity surged as impassioned fans started panic buying the products. In late March and early April, according to CandyStore.com, sales of candies from the manufacturer were up 82%, and Necco Wafers themselves spiked 150%.
This is great news for the Metropoulos family, which saw the recognition and popularity of Twinkies as one of the most powerful assets in its turnaround of Hostess. While Necco Wafers may not be as beloved as Twinkies, it's hard to imagine Valentine's Day without Sweethearts, which is a good place to begin.
The Metropoulos family also had to redesign and retrofit Hostess's bakeries for efficient production. And they did, spending $110 million on renovations, according to Forbes.
"You must improve employee conditions, fix the cracks on the floor and those types of things," family patriarch C. Dean Metropoulos told Forbes. "It affects the pride, energy and culture of the plant, and that translates into everything."
And that might be where the Metropoulos family gets started with Necco. The factory was recently cited by the Food and Drug Administration for a rodent infestation and unsanitary conditions. The FDA's letter was only a warning, but considering that some of the factory's equipment dates back seven decades, it's time for some modernization.