Hawaiian Host company sold to private investors

Some wealthy local and mainland investors have bought financially struggling kamaaina candy maker Hawaiian Host Group.

The roughly $100 million company, which claims to make more premium chocolate-covered macadamia nuts than anyone in the world, announced the sale Monday.

Honolulu-based Hawaiian Host said the deal will allow it to improve facilities, expand online sales and introduce new products.

The acquisition also relieves financial stress of the 61-year-old business that last year had 460 employees and faced the predicament of bankruptcy amid overdue vendor bills after the coronavirus pandemic decimated Hawaii tourism.

A purchase price was not disclosed.

Names of investors were not disclosed, other than Ed Schultz, who became Hawaiian Host’s president in 2019 and will continue leading the company as president and CEO.

The buyers, who Schultz said are wealthy individuals, formed HHML Acquisition LLC to purchase Hawaiian Host, which includes the company’s sister brand Mauna Loa.

A trust established by the founders of Hawaiian Host was the seller.

This trust, The Mamoru and Aiko Takitani Trust, whose primary beneficiary is a nonprofit foundation set up by the Takitanis to help Hawaii students, will receive sale proceeds and a share of future Hawaiian Host profits but does not retain any ownership interest.

Hawaiian Host also said the trust received a donation from HHML, though the size of the donation and profit sharing was not disclosed.

Tony Takitani, a nephew of Mamoru Takitani who has served on the company’s board of directors and been a trustee since 2004, expressed gratitude for the acquisition in a written statement.

“I’d like to thank the board for making the future of Hawaiian Host Group its top priority and Ed for his leadership throughout this period — the most difficult the company has ever seen — and positioning it well for decades of continued growth,” he said.

Schultz, in a statement, said, “After COVID hit, we sought a capital partner with expertise, integrity, and an unwavering commitment for Hawaiian Host Group to continue as a major Hawaii- based employer and innovator. The HHML recapitalization will preserve our unique company culture and allow us to continue to share the spirit of Hawaii here in the islands and well beyond our shores for years to come.”

Hawaiian Host said investment from the new owners will modernize the company’s 100,000-square-foot Honolulu manufacturing plant and Keaau macadamia nut processing facilities, expand a rapidly growing e-commerce division and sustain product growth.

This growth includes a national rollout that began last month of a new dairy-free ice cream in six flavors made from macadamia milk under the Mauna Loa brand.

The new chapter for Hawaiian Host adds to a storied history that began on Maui, included decades of growth capped by the acquisition of a giant rival in 2015, and then severe financial stress last year driven by COVID-19 impacts.

Hawaiian Host, which trademarked the phrase “Hawaii’s gift to the world,” claims to be the original producer of chocolate-covered macadamia nuts.

According to company history, Mamoru Takitani developed a unique recipe of blended chocolates with his wife, Aiko, in the attic of his parents’ Maui home in 1950 and created a “sensation” on the Valley Isle with chocolate-dipped macadamia nuts.

Hawaiian Host was established in 1960 in Honolulu in connection with buying and renaming Ellen Dye Candies, a confectionery business established in 1927.

In 2015, Hawaiian Host bought Mauna Loa Macadamia Nut Corp., a rival Hawaii snack maker, from the nation’s biggest candy manufacturer, The Hershey Co., which spent $130 million to acquire Mauna Loa in 2004 when Mauna Loa had about $80 million in annual sales.

Schultz said Hawaiian Host had annual revenue of around $140 million before the pandemic and that this year sales are expected to be around $100 million.

Last year Hawaiian Host received a $5 million to $10 million forgivable federal Paycheck Protection Program loan in April to offset some impacts on its business largely related to COVID-19 tourism restrictions, and in June sold its Honolulu production facility for $30 million while maintaining operations under a lease. The company also closed a production facility in California last year.

In August the company informed vendors in a letter that business was suffering because of the economic downturn brought on by COVID-19.

Hawaiian Host explained in the letter that tourism accounted for 65% of its business, and the company asked to settle past-due invoices at a discount — paying 75 cents on $1 — so that it could secure new investment capital and satisfy unpaid accounts. The company also noted that bankruptcy was its other option.

Schultz, on behalf of the company and its employees, thanked vendors and customers for supporting Hawaiian Host in a difficult time.

“We’ve been one of the most impacted states in the country (from COVID-19),” he said. “We need tourism to come back.”