Hostess may be gone, but Twinkies may live on

The baking company's demise has been a long time coming.

By Jonathan Berr Nov 16, 2012 11:34AM

PAUL J RICHARDS AFP Getty ImagesHostess Brands, which Friday announced it was going out of business, was touted a few years ago as an example of a successful corporate turnaround story. The company, which has been a train wreck for years, does have some valuable brands that may be of interest to other companies. In other words, don't write the obituary for the Twinkies just yet.

Groupo Bimbo SAB, the world's largest bread baker, might be interested in acquiring some if not all of Hostess's assets, which include creme-filled sponge cake and other Hostess products such as Sno-balls and Ding-Dongs. Though most people might not be familiar with the Mexican company, they are no doubt familiar with its brands, which include Entenmanns's baked goods, Stroehman bread and Thomas' English muffins. David Marguiles, a spokesman for the company, refused to comment about Hostess.

Flowers Foods (FLO), the U.S.'s second largest producer and marketer of packaged baked goods, could be another potential Twinkies home. The Thomassville, Georgia company acquired Tasty Baking, a Philadelphia snack food company with a similar product line-up to Hostess, for $165 million in 2011, CBS reported. Its other brands include Blue Bird and Mrs. Freshley's snack foods along with Sunbeam bread. The company declined to discuss its potential interest in Hostess.

"It is not our place to talk about any other company's business," according to Flowers. "However, this is an unfortunate situation and we are very sad for all those impacted. We are staying focused on making sure our consumers and customers have the baked foods they need -- and on serving the market."

Hostess's demise was a long time coming, DealBook reported. The company has filed for bankruptcy protection twice in the last few years, most recently in January. Unprofitable Hostess had planned to lower expenses by reducing labor costs. The offer to the unions included wage, benefit and work rule concessions but also gave them a 25% ownership stake in the company, representation on its Board of Directors and $100 million in reorganized Hostess Brands' debt.

Its unionized workers, represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers Union, cried foul and began a work stoppage. Hostess gave union members until 5 p.m. Thursday to return to work. The deadline was ignored because the company was asking for too much in the way of concessions, according to the union.

"The Wall Street investors who took over the company after the last bankruptcy attempted to resolve the mess by attacking the company's most valuable asset -- its workers," said Union President Frank Hurt in a statement. "They sought to force the workers, who had already taken significant wage and benefit cuts, to absorb even greater cuts including the loss of their pension contributions."

Hostess CEO Gregory F. Rayburn said in a statement, "We deeply regret the necessity of today's decision, but we do not have the financial resources to weather an extended nationwide strike."

With the liquidation of Hostess, 18,000 workers lost their jobs. Even if buyers acquire the company's assets and brands, there is no telling how many would be hired back by the new owners.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr

Tags: FLO


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