Hostess Expects to Split Up Snack Cakes in Sale

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NEW YORK (AP) - Twinkies, Wonder Bread and Devil Dogs are likely to return to shelves in coming months, but probably not under the same owners.

Hostess Brands Inc. said in bankruptcy court Friday that it's narrowing down the bids it received for its brands and expects to sell off its snack cakes and bread to separate buyers. The testimony came from an investment banker for Hostess, which is in the process of liquidating.

A likely suitor has emerged for the namesake Hostess brand, which includes Twinkies, Ding Dongs and Ho Hos, along with Dolly Madison cakes, which includes Coffee Cakes and Zingers, said Joshua Scherer of Perella Weinberg Partners. He said another viable bid was made for Drake's cakes, which includes Devil Dogs, Funny Bones and Yodels. That bidder also wants to buy the Drake's plant in Wayne, N.J., which Scherer said is the country's only kosher bakery plant.

Additional bids have been submitted for its bread brands, which include Wonder and Home Pride. Hostess expects to file binding "stalking horse" bids for many of its brands in January. Those filings would be followed by a four-week auction process to allow competing bids. Scherer said the auctions could be very active for some of the brands, given the number of parties that have expressed interest. Sales could be completed by as early as mid-March.

About 30 plants could also be sold with the brands, Scherer said, with six plants, several warehouses and a fleet of trucks likely to be closed or scrapped.

Hostess has hired a firm Hilco to act as a sales agent for those additional assets; the firm will also give Hostess a $30 million loan to maintain operations during its liquidation, which is expected to take about a year.

Hostess, based in Irving, Texas, has said potential buyers include major packaged food companies and national retailers, such as big-box retailers and supermarkets. The company has stressed it needs to move quickly in the sale process to capitalize on the outpouring of nostalgia sparked by its bankruptcy.

To begin winding down its operations late last month, Hostess had said it would retain about 3,000 workers to shutter plants and perform other tasks. On Friday, an attorney for Hostess said in court that figure was down to about 1,100 employees. The liquidation of Hostess ultimately means the loss of about 18,000 jobs, not including those shed in the years leading to the company's failure. CEO Greg Rayburn, who was hired as a restructuring expert earlier this year, is earning $125,000 a month.

The company's demise came after years of management turmoil and turnover, with workers saying the company failed to invest in updating its snack cakes and breads. Hostess filed for its second Chapter 11 bankruptcy in less than a decade this January, citing steep costs associated with its unionized workforce.

The company was able to reach a new contract agreement with its largest union, the Teamsters, the bakers union rejected the terms and went on strike Nov. 9. A week later, Hostess announced its plans to liquidate, saying the strike crippled its ability to maintain normal production. Although Hostess sales have been declining over the years, they still clock in at between $2.3 billion and $2.4 billion a year.

When asked how much the brands are expected to fetch from buyers, Scherer said he would rather not say.

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140 Comments

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martinrockett

San Francisco will never be normal...

January 28 2013 at 6:01 PM Report abuse rate up rate down Reply
buzzyseed

I want to thank the bakers union for me losing my driver job

December 28 2012 at 7:30 PM Report abuse rate up rate down Reply
mullermugs32

People still eat Wonderbread?...ugh

December 25 2012 at 4:16 AM Report abuse rate up rate down Reply
arenadood

I hope they will stay the same. I have a stash of the special chocolate filling Twinkies in my chest freezer.

December 22 2012 at 6:18 PM Report abuse rate up rate down Reply
dewey00

Unless the new company uses the same exact brands and ingredients, they goodies will not be the same. :-(

December 22 2012 at 4:40 PM Report abuse rate up rate down Reply
Rick West

A little girl goes to the barber shop with her father. She stands next to the barber's chair eating a snack cake, while her dad gets his hair cut. The barber says to her, "Sweetheart, you're gonna get hair on your Twinkie." She says, "Yes, I know, and I'm gonna get boobs, too."

December 22 2012 at 3:33 PM Report abuse +2 rate up rate down Reply
1 reply to Rick West's comment
delawaredude4u

That joke is older than Methusela try another one, honey.

December 22 2012 at 4:12 PM Report abuse rate up rate down Reply
jwilli5815

Don't kid yourself these products haven't been the same in years, I't's my opinion they caused their on downfall.
The taste and texture where all different across the board,example Wonder Bread once the king of breads and a staple of many tables across the USA ,for many years seemed tastless,no body,smooth soft texture disspeared,they sliced it in such a way if you picked up the loaf wrong your fingers would go right thru the slice.The CupCakes once soft and chewy were now very dry had had a stonger imitation chocolate after taste.

December 22 2012 at 3:27 PM Report abuse -1 rate up rate down Reply
1 reply to jwilli5815's comment
buzzyseed

you are right, i felt that the twinkies were dry..the cupcakes when i was a kid were the best

December 28 2012 at 7:29 PM Report abuse rate up rate down Reply
jama5150

Chinese "TWINKIES" Laced with Lead, Asbestos, Chualk & maybe some Heavey Metals

"YUM"

December 22 2012 at 3:17 PM Report abuse -1 rate up rate down Reply
jama5150

Ready for Chinese "TWINKIES" Laced with Lead, Asbestos, Chualk & maybe some Heavey Metals

"YUM"

December 22 2012 at 3:17 PM Report abuse rate up rate down Reply
huffanpuff40

SAN FRANCISCO, WILL BE BACK TO NORMAL, NOW THAT TWINKIES ARE GONE.

December 22 2012 at 3:01 PM Report abuse -4 rate up rate down Reply