Twinkies Likely to Survive Sale of Hostess

Twinkies Likely to Survive Sale of HostessBy TOM KRISHER

DETROIT -- Twinkie lovers, relax.

The tasty cream-filled golden spongecakes are likely to survive, even though their maker will be sold in bankruptcy court.

Hostess Brands Inc., baker of Wonder Bread as well as Twinkies, Ding Dongs and Ho Ho's, will be in a New York bankruptcy courtroom Monday to start the process of selling itself.

The company, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, it's asking the court for permission to sell assets and go out of business.

But with high brand recognition and $2.5 billion in revenue per year, other companies are interested in bidding for at least pieces of Hostess. Twinkies alone have brought in $68 million in revenue so far this year, which would look good to another snack-maker.

"There's a huge amount of goodwill with the commercial brand name," said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy. "It's quite conceivable that they can sell the name and recipe for Twinkies to a company that wants to make them."

Hostess has said it's received inquiries about buying parts of the company. But spokesman Lance Ignon would not comment on analysts' reports that Thomasville, Ga.-based Flowers Foods Inc. and private equity food investment firm Metropoulos & Co. are likely suitors. Metropoulos owns Pabst Brewing Co., while Flowers Foods makes Nature's Own bread, Tastykake treats and other baked goods. Messages were left for spokesmen for both companies on Sunday.

"We think there's a lot of value in the brands, and we'll certainly be trying to maximize value, both of the brands and the physical assets," Ignon said Sunday. He said it's possible some of Hostess' bakeries will never return to operation because the industry has too much bakery capacity.

Little will be decided at Monday afternoon's hearing before Bankruptcy Judge Robert Drain, Pottow said. The judge eventually will appoint a company that specializes in liquidation to sell the assets, and the sale probably will take six months to a year to complete, Pottow said.

Irving, Texas-based Hostess filed for Chapter 11 bankruptcy protection in January for the second time in less than a decade. Its predecessor company, Interstate Bakeries, sought bankruptcy protection in 2004 and changed its name to Hostess after emerging in 2009.

The company said it was saddled with costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs for workers; the new contract offer would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.

Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling.

Then last week thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company's latest contract offer. The bakers union represents about 30 percent of the company's workforce.

By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.

The company filed a motion to liquidate Friday. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.

News of the decision caused a run on Hostess snacks at many stores around the country, and the snacks started appearing on the Internet at inflated prices.

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86 Comments

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dvdfrnzwbr

Who eats this crap? It's so easy to bake at home.

November 20 2012 at 1:47 AM Report abuse rate up rate down Reply
jeffsmithharley

maybe they should make twinkies in china

November 19 2012 at 10:55 PM Report abuse rate up rate down Reply
fitecf

So I found a pack of twinkies in the back of the pantry a while ago that had expired 4 years ago. They were just as soft and fresh as the day they were made. That's wrong!

November 19 2012 at 9:05 PM Report abuse rate up rate down Reply
1 reply to fitecf's comment
BRETT

actually, it is right............twinkies are not real food. my sister told me that yesterday.

November 19 2012 at 11:12 PM Report abuse rate up rate down Reply
jerzfox

Twinkies are OK but I really like the chocolate creme-filled cupcakes. YUM!

November 19 2012 at 9:01 PM Report abuse rate up rate down Reply
wla2000

Twinkies and roaches will outlast us all!

November 19 2012 at 6:02 PM Report abuse rate up rate down Reply
1 reply to wla2000's comment
gblank1603

Actually a Twinkie just has a 3 week shelf life like any other baked product.

November 19 2012 at 7:27 PM Report abuse rate up rate down Reply
wla2000

Twinkies and cockroaches will outlast us all!

November 19 2012 at 6:02 PM Report abuse rate up rate down Reply
chzyrider

There is even a run on Little Debbie snack cakes at our local grocery stores because all the Hostess products are quickly selling out or gone. The Snowballs were always my favorite of all Hostess cakes since I was kid and I'm hoping my new grandchildren will be able to enjoy them as well. In my opinion the Little Debbie versions of various Hostess products are just not as good.

We can only hope that the recent mediation announcement will proceed favorably...
http://www.cnbc.com/id/49889974
Or that perhaps another brand will continue to make the Hostess products we loved in the same way.

Or all the people that are hoarding dozens of boxes better eat them quick because contrary to popular belief, Twinkies will not outlast things like a nuclear war. They only have a 4-week (store sell-by date) shelf life.

I won't be joining those considering or willing to pay the outrageous prices that some are putting on ebay for them. That would be funny if some idiot actually paid whatever gouged amount for a box of Twinkies and then they are back on the stores shelves a few days later at normal price again.

November 19 2012 at 5:28 PM Report abuse rate up rate down Reply
kafienkarl

Who cares? Has anyone look at the stats regarding the growth of diabetes in this country and how much it costs? billions

November 19 2012 at 5:24 PM Report abuse +1 rate up rate down Reply
1 reply to kafienkarl's comment
PapaJoe

Consumption of sugar does NOT cause diabetes.......Obesity can possibly cause type II diabetes.....I have family members with type I and type II, and a few others having diabetes have passed on.......

November 19 2012 at 5:58 PM Report abuse rate up rate down Reply
1 reply to PapaJoe's comment
gblank1603

Over consumption of sugar causes obesity which causes diabetes

November 19 2012 at 7:29 PM Report abuse rate up rate down
Joseph Krummel

i have a case of hubigs pies for $500,000 since a box of twinkies are going for $200,000...

November 19 2012 at 4:44 PM Report abuse rate up rate down Reply
tnphotos4u

Why not just hire all new non union workers?????

November 19 2012 at 4:39 PM Report abuse +1 rate up rate down Reply
2 replies to tnphotos4u's comment
Dale

Did you notice or even read the article? What do you think of executives taken extreme bonus while the company was having money troubles or did you miss that part or ignore it

November 19 2012 at 11:02 PM Report abuse +1 rate up rate down Reply
BRETT

totally agreed, but it is too late for hostess.

November 19 2012 at 11:14 PM Report abuse -1 rate up rate down Reply