Unanswered questions surround sale of Necco
Details about Tuesday’s sudden closure of Necco’s manufacturing plant in Revere — including who bought the candy maker — remain a mystery, but this much is certain: Necco candies already are in short supply.
Prior to Tuesday’s — apparently permanent — shut down, manufacturing operations were halted for seven days at the plant starting on May 29 to address Food and Drug Administration code violations. Those included evidence of rodent activity, roof leaks, and other unsanitary conditions. Production resumed in June, but with Tuesday’s stoppage, whatever was manufactured in those few weeks is the only remaining stock of Necco Wafers, Sky Bar, Sweethearts, and other candies.
“I don’t think there’s much out there,” said Frank D’Amelio, 38, a mechanic with Necco for the past four years.
D’Amelio was among the dozens of workers present at a town hall-style meeting at Necco’s cafeteria Tuesday during which chief executive Michael McGee reportedly said the company was shutting down “effective immediately.” Workers were under the impression that Necco, which traces its roots to 1847, would continue to operate through at least November, when the lease at its American Legion Highway headquarters was scheduled to expire.
Round Hill Investments LLC, which bought the company — formally known as New England Confectionery Co. — for $17.3 million at an emergency auction in May, confirmed the plant’s closure. Round Hill said that “after careful engagement and consideration,” it had sold the brands to another national candy manufacturer. Round Hill, owned by billionaire C. Dean Metropoulos and his sons Evan and Daren, did not elaborate on its decision to sell, or reveal details about the sale, including the identity of the buyer.
The fact that an entity owned by the Metropoulos family — known for reinvigorating brands including Hostess, Pabst Blue Ribbon, Bumble Bee, and Chef Boyardee — would offload Necco less than two months after acquiring it means Round Hill probably wasn’t optimistic about turning a profit, said Peter Cohan, business strategy lecturer at Babson College.
“They owned the company for five seconds and they shut it down. They couldn’t have possibly made any money on it,” Cohan said. “The reason to shut it down is clearly related to trying to minimize the amount of money they’ll lose. [By selling it], they’re going to lose money, but not as much.”
Typically, the Metropouloses hang on to a brand for three to four years and then sell it, which makes the Necco move all the more unusual, said Ariel Markelevich, associate professor of accounting at Suffolk University’s Sawyer Business School.
“I’m sure they sat back and said, ‘We have two options: we either take Necco, do our magic and improve on the company, and sell it for what we expect to get from it in three to five years, or we take the offer that’s on the table,’ ” Markelevich said. “We know they took the offer that’s on the table . . . We don’t know if it was a fire sale or a luxury sale in which they made a lot of money.”
Revere Mayor Brian M. Arrigo said in a statement the city “received no advance word about the situation.” He added that six private food service companies, including Legal Sea Foods and Kelly’s Roast Beef, have reached out to offer jobs to some of the 230 or so former Necco workers.
For people such as D’Amelio, a married father of three who will likely lose his pension, the offers may help soften the blow.
“I was taken by surprise,” he said. “I gave my heart and soul for this place. I wanted to help bring the company back.”