• Facebook
  • Twitter
  • Subscribe
  • RSS

The Death Of The Twinkie Was Greatly Exaggerated

Twinkies

The Wall Street Journal reports that Hostess is close to a deal to sell several of it’s baked good brands, including the Twinkie:

Hostess Brands Inc. is nearing a deal to sell its Twinkie brand and other cakes to private-equity firms Apollo Global ManagementLLC and C. Dean Metropoulos & Co. for more than $400 million, said people familiar with the discussions.

The deal could be disclosed as soon as Tuesday and would serve as the opening bid in a coming bankruptcy-court auction for the assets, which include Dolly Madison and other brands.

The so-called stalking horse bid could be topped by other suitors at the auction, in which case Apollo and Metropoulos would likely be entitled to what’s known as a breakup fee. One person cautioned a deal might not be disclosed until later this week, but the parties were putting finishing touches on the agreement Tuesday.

The deal, which includes several factories, caps Hostess’s efforts to sell off popular cake and bread brands as it winds down operations this year. Hostess, based in Irving, Texas, in November announced it was shutting down and selling of its 30 or so brands and 36 plants, a move expected to result in the loss of more than 18,000 jobs. Hostess moved to liquidate after it failed to reach a deal on cost cuts with its second-largest union, representing thousands of bakers.

(…)

Flowers FoodsInc., the Thomasville, Ga.-based maker of Tastykakes and Nature’s Own breads, is offering up to $360 million in cash for five major Hostess bread brands–including Wonder and Nature’s Pride–along with 20 plants and 38 depots. In addition, the baking company is offering $30 million for Hostess’s Beefsteak rye brand. A judge Friday cleared Hostess to place those bread assets on the auction block on Feb. 28.

Hostess Monday debuted two more sale deals—one for a group of bread brands including Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s, and one for the Drake’s brand, which made treats like Devil Dogs, Ring Dings and Yodels before Hostess began liquidating in bankruptcy. United States Bakery Inc., a Portland, Ore., company also known as Franz Family Bakery, is offering $28.85 million for the bread brands plus four bakeries, 14 depots and equipment. McKee Food Corp., the Collegedale, Tenn.-based maker of Little Debbie snack cakes, has submitted a $27.5 million bid for the Drake’s brand and certain equipment.

Of course, this is exactly what the Hostess Chapter 7 was intended to accomplish. Notwithstanding its financial problems and inability to deal with the production and labor costs that ultimately doomed the company, Hostess was still a company with substantial assets on the day it filed for bankruptcy protection. Indeed, the entire purpose of a Chapter 7 Bankruptcy is to oversee the orderly sale of the the company’s assets so that its creditors can be at least partially satisfied. As I said several times as the Hostess story unfolded in November, bankruptcy was not going to mean the end of the Twinkie, the Ring Ding, or any of your other favorite Hostess treats.

Now, it’s entirely possible that the entities buying these brands will end up not succeeding themselves, but there are no guarantees in life. That’s kind of what capitalism is supposed to be about.

Related Posts:

About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. rodney dill says:

    The biggest impact on our family was the loss of ‘Home Pride’ bread at the local grocery store.

    Like or Dislike: Thumb up 0 Thumb down 0

  2. Peterh says:

    Is that an expiration date? Who knew…..

    Like or Dislike: Thumb up 1 Thumb down 0

  3. Davebo says:

    financial problems and inability to deal with the production and labor costs that ultimately doomed the company

    It’s labor costs were greatly reduced. Well, except for senior management which were extravagantly increased.

    But then Doug knows this. It’s ground we’ve covered and Doug’s ignored before.

    Like or Dislike: Thumb up 8 Thumb down 2

  4. Mikey says:

    Of course the Twinkie wasn’t going to go away. The “Twinkies” name alone is worth many millions of dollars, and of course there are many production facilities for Hostess’ entire product line.

    My question is: will they taste the same when they come back?

    Like or Dislike: Thumb up 2 Thumb down 0

  5. mantis says:

    But I thought the unions ruined dessert and fun for everyone, always! Is that not true?

    Like or Dislike: Thumb up 8 Thumb down 4

  6. Moosebreath says:

    @Mikey:

    “My question is: will they taste the same when they come back?”

    I hope not. Any change would be an improvment.

    Like or Dislike: Thumb up 2 Thumb down 0

  7. C. Clavin says:

    Jenos Indanian #13 was thought dead?

    Like or Dislike: Thumb up 0 Thumb down 0

  8. Mikey says:

    @Moosebreath:

    Any change would be an improvment.

    What, you mean you didn’t enjoy quasi-plastic goat spooge with grainy pseudo-sponge and a hint of lemon?

    Like or Dislike: Thumb up 2 Thumb down 0

  9. Tony W says:

    @Davebo:

    inability to deal with the production and labor costs that ultimately doomed the company

    Yes, this is the typical libertarian tripe – those evil Unions ruined the Twinkie.

    Of course it had nothing to do with a middle class increasingly favoring healthier diet choices – including the rejection of carbs and processed foods. Nor as Davebo points out was it the executives’ fault for making bad business choices and not, say, diversifying into products that would meet that demand.

    No, the fault here lies completely upon the ability of laborers to collectively bargain for whatever wages and working conditions they could negotiate – that’s what ultimately doomed Wonder Bread.

    I will admit that I am having trouble keeping up — I had previously been told letting “the market” sort things out was the ultimate test of goodness in America, apparently that only applies to the corporations themselves, not the labor pool.

    Like or Dislike: Thumb up 12 Thumb down 2

  10. rudderpedals says:

    To be fair Hostess (a vulture capitalist) is still a debtor in possession under Chapter 11 and not Chapter 7, and that’s bad. The same people who ran it into the ground get to game the auctions *and* no one’s all that motivated to sniff about the self dealing looting financial engineering preceding the bankruptcy.

    Like or Dislike: Thumb up 3 Thumb down 0

  11. Liberal Capitalist says:

    The Death Of The Twinkie Was Greatly Exaggerated

    Ummmm… so is that some sorta GOP gay slang thingie, or what?

    I mean, if you have “log cabin” republicans, then “twinkie”…

    Maybe it’s a Palin thing.

    Like or Dislike: Thumb up 1 Thumb down 0

  12. Moosebreath says:

    @Mikey:

    “What, you mean you didn’t enjoy quasi-plastic goat spooge with grainy pseudo-sponge and a hint of lemon?”

    No, for roughly the same reasons that, even as a native Philadelphian, I don’t like liquid glop claiming to be “cheese food” (a phrase which always made me think of stuff which provides nourishment to dairy products). We at least had a better alternative for Twinkies in Tastykakes.

    Like or Dislike: Thumb up 1 Thumb down 0

  13. Mikey says:

    @Moosebreath: One good thing about having a wife who grew up in Germany: she never had fake processed crap like “cheese food” growing up, so she never brings it into our house.

    We didn’t have Tastykakes where I grew up in Michigan. Plenty of Little Debbies, though.

    Like or Dislike: Thumb up 1 Thumb down 0

  14. al-Ameda says:

    Twinkies may yet survive? Bad news indeed.

    For a few brief shining moments, I thought that America was coming back, stronger than ever. Nope.

    Like or Dislike: Thumb up 4 Thumb down 0

  15. KariQ says:

    You cannot harm a Twinkie and you cannot kill the Twinkie. I thought we all knew that.

    Like or Dislike: Thumb up 2 Thumb down 0

  16. grumpy realist says:

    One of the most horrifying chapters in Jane Stern’s cookbook “Good Food”, written almost entirely in cheek, is the one dealing with 1950s food, including jello and Twinkies. She managed to dig up a recipe from one of the women’s magazines on How To Make A Dessert with Twinkies Suspended In Jello.

    I kid you not. (Shudder)

    Like or Dislike: Thumb up 1 Thumb down 0

  17. rodney dill says:

    @KariQ:The Vibranium used to make Caption America’s shield was actually synthesized from Twinkies.

    Like or Dislike: Thumb up 1 Thumb down 0

  18. Drew says:

    As I understand it, Doug, you have practiced bankruptcy law. So you know the deal. The issue has never been does a brand like Twinkies have value, but how will it be operationally produced. I will be very interested to see how many production facilities survive, how they are staffed, and what the contractual labor arrangements are.

    I think the unions shot their proverbial dirks off.

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Drew says:

    PS

    Note that Flowers is in the mix, as I predicted. Probably eastern seaboard facilities oriented. Bimbo? heh….

    Like or Dislike: Thumb up 0 Thumb down 0