Report: Hostess in talks to sell its bread brands
NEW YORK (AP) - The makers of Thomas' English muffins and Tastykake snacks are emerging as the two of the bidders for Wonder Bread and other Hostess bread brands as the company tries to sell off its assets under bankruptcy-court oversight, a newspaper reported Saturday.
The Wall Street Journal said Hostess Brands Inc. could reveal as early as next week that Flowers Foods Inc. and Grupo Bimbo SAB are in discussions to acquire the bread brands, which also include Nature's Pride. The report said the brands could command $350 million.
Grupo Bimbo's brands include Arnold breads, Thomas' English muffins and Entenmann's cakes. Flowers Foods Inc.'s brands include Nature's Own breads and Tastykake snacks.
Hostess sells Twinkies, Ding Dongs and Ho Hos, along with Dolly Madison cakes, which includes Coffee Cakes and Zingers. Hostess also sells Devil Dogs, Funny Bones, and Yodels under the Drake's brand.
Hostess, which is based in Irving, Texas, announced in November that it was shutting down its business and selling its bread, snacks and cakes brands along with its 33 bakeries and other operations.
The company's demise came after years of management turmoil and turnover. Workers said 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 last year, citing steep costs associated with its unionized workforce.
The company was able to reach a new contract agreement with its largest union, the Teamsters, but 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. In 2011, the company's revenue was $2.5 billion.
Hostess declined to comment, as did Grupo Bimbo's U.S. division, Bimbo Bakeries USA. Bimbo's parent company is headquartered in Mexico. A message left with Flowers Foods, which is based in Thomasville, Ga., was not immediately returned.
Hostess said in bankruptcy court proceedings in December that it was narrowing down the bids it had received and that it expects to sell off its snack cakes and bread brands to different buyers.
Hostess said in December that it expects to file binding bids for many of its brands this month, followed by a four-week auction process to allow competing bids. Closings for many brands could come as soon as mid-March, according to Joshua Scherer of Perella Weinberg Partners, which is advising Hostess.
An attorney for Hostess said in court in December that 1,100 employees had been retained to shut down plants and perform other tasks as it winds down its operations. The liquidation of the company will ultimately mean the loss of 18,000 jobs, not including those shed in the years leading to the company's failure.
The Wall Street Journal said Hostess Brands Inc. could reveal as early as next week that Flowers Foods Inc. and Grupo Bimbo SAB are in discussions to acquire the bread brands, which also include Nature's Pride. The report said the brands could command $350 million.
Grupo Bimbo's brands include Arnold breads, Thomas' English muffins and Entenmann's cakes. Flowers Foods Inc.'s brands include Nature's Own breads and Tastykake snacks.
Hostess sells Twinkies, Ding Dongs and Ho Hos, along with Dolly Madison cakes, which includes Coffee Cakes and Zingers. Hostess also sells Devil Dogs, Funny Bones, and Yodels under the Drake's brand.
Hostess, which is based in Irving, Texas, announced in November that it was shutting down its business and selling its bread, snacks and cakes brands along with its 33 bakeries and other operations.
The company's demise came after years of management turmoil and turnover. Workers said 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 last year, citing steep costs associated with its unionized workforce.
The company was able to reach a new contract agreement with its largest union, the Teamsters, but 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. In 2011, the company's revenue was $2.5 billion.
Hostess declined to comment, as did Grupo Bimbo's U.S. division, Bimbo Bakeries USA. Bimbo's parent company is headquartered in Mexico. A message left with Flowers Foods, which is based in Thomasville, Ga., was not immediately returned.
Hostess said in bankruptcy court proceedings in December that it was narrowing down the bids it had received and that it expects to sell off its snack cakes and bread brands to different buyers.
Hostess said in December that it expects to file binding bids for many of its brands this month, followed by a four-week auction process to allow competing bids. Closings for many brands could come as soon as mid-March, according to Joshua Scherer of Perella Weinberg Partners, which is advising Hostess.
An attorney for Hostess said in court in December that 1,100 employees had been retained to shut down plants and perform other tasks as it winds down its operations. The liquidation of the company will ultimately mean the loss of 18,000 jobs, not including those shed in the years leading to the company's failure.
They mean that cancer causing paste is worth something? Just make up a new name for paste and they dont have to pay for it.
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Aren't Unions wonderful??? They were the final nail in the Hostess tale of woe and instrumental in loosing 18000 people their livelihoods. I wonder what they were thinking besides of their own pockets. Hostess might have had a chance if not for the bakers Union being so damn greedy that they decided that the way to teach them a lesson was to go on strike. Now they have over 10000 less members to suck off of and they must feel really great now. The Unions were not the only cause of the demise, but they were the final nail in the coffin that we will bury the Hostess brand in. .Â
 @LongBeachBum  That would make sense except that Tastykakes are made by the Same greedy union guys and Flowers foods posted something like 100M in profit last year.  So here is the arithmetic - the unions represent the bakers, and all corps that bake pay the same wages.  The other ingredient is flour which is a commodity that fluctuates in price.  The third is Mgt.  So IMHO the problem is Mgt.  By the way the price of flour spiked last summer about 25%.  Smart mgt at Flowers hedged their flour costs as a std practice so they can lock in the price and forecast with accuracy. Same w the union wages they are the same for 3 years at a time. Meanwhile hostess mgt is from a pvt equity corp that really doesnt know a whole lot about baking or flour, yet give themselves fat raises regularly.   Went to school with the Controller @ Flowers foods who is whip smart and nice as pie.  Pretty sure they'd wait to buy at the right time, e.g. out of bankruptcy court vs. saving the PE firms butt.  The PE firm now has no control, much easier to buy from a judge looking out for investors than PE guys looking out for themselves.
My guess is that the owners of the company will more than recuperate their losses when they sell both the brands and the properties. It was probably their intention from the beginning to sell off the company piece meal rather than try to make a go of it. A profit of 2.5 billion in 2011, while working with unions, sounds pretty good to me. My understanding is that the company was purchased by venture capitalists with no experience in this field. It would be interesting to know the WHOLE story, rather than just blaming the "unions" for the failure of this company. The health food craze certainly didn't help, although I am sure plenty of people enjoyed these treats.
 @dentalgirl57 Ummm, the article say 2.5 billion in revenues, not 2.5 billion in profit. There's a difference.Â
 @GeorgeG.  @dentalgirl57Â
There sure is, and Flower foods makes plenty of profit (over 100M /yr for the past 3 yr) while dealing with the same unions. Â The difference is smart mgt that knows their industry, is very cost conscious, and has a long history of success dealing with a product that goes stale in days, and requires you to buy crazy amounts of flour in a volatile commodities market. Â Â Labor is the least of thier worries, the wage costs are fixed for 3 yrs at a time, and all competitors (Flowers, Bimbo, Hostess) pay identical costs for labor. Â The amount of labor in a twinkie is small and fixed vs. the amt of flour and cost of capital equipment to make it. Â The PE firm paid dearly for the capital and thought they could beat up a union to allow them to line their pockets. Â Not so much. Â Capitalism isnt always pretty. Â They blame the unions to protect their reputations as investors and managers of other peoples money.
Is anyone old enough to remember the banana cream filled Twinkies? Man, those were the BEST! Why Hostess discontinued them is beyond me!
It they are lucky, maybe the new owner will hire some of those recently displaced Barkers Union employees but without the union this time.
 @scared_citizen Nope they will be successfull because mgt knows how to hedge the price of flour.   They all deal with the same Unions already.  the bakers union is in flowers foods and Bimbo and always has been.  This is why the unions had no interest in concessions, they knew how bad mgt was (and so did Flowers and Bimbo), just wait for them to fail and deal with the new owners who may know something about bread (it goes stale) and flour (it changes in price daily) and unions (who lock into 3 yr labor deals giving all firms the same unit labor cost).  The Pvt Eq firm that owned hostess wanted a ton of money for aging bakeries - they were old technology and spent their capital on paying mgt bonuses.   You dont hear Flowers foods crying about Unions they are making plenty of $$.  Mmmm tastykakes!!
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 @scared_citizen Unions did not kill Hostess, terrible management did.
 @Sanctuary  @scared_citizen I guess it's good thing then that the company is being sold to different management.
 @Sanctuary  @scared_citizen Hostess was held hostage to a plethora of bizarre and inefficient rules, including but not limited to the much maligned requiring breads and desserts go in separate trucks.  Since you don't consider the union complicit here, under what circumstances would you EVER blame a union?
well, if they required different people to answer the phones, one for dessert orders and one for bread orders, then why would have gone too far... wait, there's no more company, I guess they went too far already.....
 @Sanctuary  @scared_citizenÂ
Yeah, the management failed when they went union to begin with !