Twinkies maker Hostess plans closure

Nov 17 2012, 13:01 IST
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SummaryHostess Brands Inc, the bankrupt maker of Twinkies snack cakes and Wonder Bread, is seeking a US court's permission to go out of business.

months battling for wage cuts and other concessions from 12 unions representing Hostess workers. At one point earlier this year, Hostess had a potential outside equity investor lined up, but failure to gain pension relief from the International Brotherhood of Teamsters union killed that option, the company said in its court filing on Friday.

The company submitted offers to both the Teamsters and the bakery union in August, in what the company said was a final effort to save the company. The Teamsters accepted the proposal but the bakery union balked.

With court approval, Hostess implemented the contract changes in October. The bakery workers then launched strikes that disrupted operations at 24 bakeries. Hostess said the strikes were the final blow to the already daunting obstacles to reorganization.

The company's court filing said that it hopes it can arrange the sale of groups of assets to be operated as going concerns.


Hostess has 565 distribution centers and 570 bakery outlet stores, as well as the 33 bakeries. Besides Twinkies and Wonder Bread, its brands include Nature's Pride, Dolly Madison, Drake's, Butternut, Home Pride and Merita.

The company said in Friday's court filing that it would probably take about a year to wind down. It will need about 3,200 employees to start that process, but only about 200 after the first few months.

Hostess had been gauging acquisition interest for certain brands for months and in late September received a number of potentially viable proposals to purchase certain assets.

Pabst Brewing Co owner, C. Dean Metropoulos & Co, is considering making an offer to buy Hostess Brands Inc,  Daren Metropoulos, a principal at the private- quity firm, told Bloomberg News. Metropoulos did not return a request for comment.

SunTrust Robinson Humphrey analyst William Chappell Jr. said Flowers Foods Inc could be among the potential buyers for some Hostess assets. And he said the company's liquidation was a positive step for the sector because it will reduce the number of major vendors.

In addition to Flowers, Bimbo Bakeries USA, a division of Mexico-based Grupo Bimbo, and Pepperidge Farm, a division of Campbell Soup Co, were considered prospective buyers, analysts said.

It is not a given that all of the better-known brands will survive, analysts said. I'd be surprised if the Twinkies brand isn't gone for good, said Timothy Ramey, analyst at D.A. Davidson & Co.

The company has canceled all orders with

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