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What is next for Twinkies maker Hostess Brands?
Nov. 17 (Bloomberg) -- Hostess Brands Inc., the bankrupt baker of Twinkies and Wonder bread, may attract bids for its brands from rival Flowers Foods Inc. and private equity firm C. Dean Metropoulos & Co. in a liquidation the company estimates will take about a year.
The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos said yesterday it would fire more than 18,000 employees and go out of business after a weeklong strike by its bakers’ union. Metropoulos, owner of Pabst Brewing Co., said it may bid for Hostess’s ``iconic brands.’’ Flowers, maker of Nature’s Own bread and Tastykake snacks, could pursue some of its rival’s assets to expand its geographic reach and fill existing territory, wrote William Chappell, an analyst with SunTrust Robinson Humphrey.
Flowers is “one of the most eligible acquirers” of Hostess assets and brands, Amit Sharma, an analyst at BMO Capital Markets Corp. in New York, said in a separate note, citing Flowers’ management, acquisitions and “relatively small” overlap with Hostess’s major markets and products. Flowers shares jumped 10 percent yesterday in New York trading.
“This is an unfortunate situation and we are very sad for all those impacted,” Keith Hancock, a spokesman for Thomasville, Georgia-based Flowers, said in an e-mailed statement. “We are staying focused on making sure our consumers and customers have the baked foods they need –- and on serving the market.”
‘Small Consolation’
Flowers probably won’t bid for all of the assets, the analysts said. Daren Metropoulos, a principal of the Greenwich, Connecticut-based private equity firm, said of Hostess in an e-mail yesterday that ``shedding the complications of the unions and old plants makes it even more attractive.”
Tom Becker, a spokesman for Hostess, declined to comment on potential asset bids. While Hostess has seen interest in pieces of the business, its labor contracts and pension obligations have deterred offers for the whole company, Chief Executive Officer Gregory F. Rayburn said yesterday. Hostess’s brands include Dolly Madison, Drake’s, Merita and Butternut.
“Hopefully, someone will buy the brands, and some of the brands can live on, but that’s a pretty small consolation for people who are out of work,” Rayburn said in an interview on Bloomberg Television. “Somebody might buy the brand but that doesn’t mean they’re going to buy” plants and equipment used to make the products.
David Margulies, a spokesman for Bimbo Bakeries USA, didn’t respond to an e-mail seeking comment on that company’s potential interest in Hostess assets. Bimbo, based in Horsham, Pennsylvania, is the U.S. division of Mexico’s Grupo Bimbo SAB, the maker of Entenmann’s cakes and Thomas’ English muffins.
‘Death Spiral’
Even before the strike, Hostess endured years of declining sales as Americans turned to rivals’ snacks and breads, while ingredient costs and labor expenses climbed.
Tim Ramey, an analyst for D.A. Davidson & Co., said he expects Twinkies and other Hostess brands to disappear from the marketplace. Any buyer would need a distribution system to get the products into stores, he said.
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Nov. 17 (Bloomberg) -- Hostess Brands Inc., the bankrupt baker of Twinkies and Wonder bread, may attract bids for its brands from rival Flowers Foods Inc. and private equity firm C. Dean Metropoulos & Co. in a liquidation the company estimates will take about a year.
The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos said yesterday it would fire more than 18,000 employees and go out of business after a weeklong strike by its bakers’ union. Metropoulos, owner of Pabst Brewing Co., said it may bid for Hostess’s ``iconic brands.’’ Flowers, maker of Nature’s Own bread and Tastykake snacks, could pursue some of its rival’s assets to expand its geographic reach and fill existing territory, wrote William Chappell, an analyst with SunTrust Robinson Humphrey.
Flowers is “one of the most eligible acquirers” of Hostess assets and brands, Amit Sharma, an analyst at BMO Capital Markets Corp. in New York, said in a separate note, citing Flowers’ management, acquisitions and “relatively small” overlap with Hostess’s major markets and products. Flowers shares jumped 10 percent yesterday in New York trading.
“This is an unfortunate situation and we are very sad for all those impacted,” Keith Hancock, a spokesman for Thomasville, Georgia-based Flowers, said in an e-mailed statement. “We are staying focused on making sure our consumers and customers have the baked foods they need –- and on serving the market.”
‘Small Consolation’
Flowers probably won’t bid for all of the assets, the analysts said. Daren Metropoulos, a principal of the Greenwich, Connecticut-based private equity firm, said of Hostess in an e-mail yesterday that ``shedding the complications of the unions and old plants makes it even more attractive.”
Tom Becker, a spokesman for Hostess, declined to comment on potential asset bids. While Hostess has seen interest in pieces of the business, its labor contracts and pension obligations have deterred offers for the whole company, Chief Executive Officer Gregory F. Rayburn said yesterday. Hostess’s brands include Dolly Madison, Drake’s, Merita and Butternut.
“Hopefully, someone will buy the brands, and some of the brands can live on, but that’s a pretty small consolation for people who are out of work,” Rayburn said in an interview on Bloomberg Television. “Somebody might buy the brand but that doesn’t mean they’re going to buy” plants and equipment used to make the products.
David Margulies, a spokesman for Bimbo Bakeries USA, didn’t respond to an e-mail seeking comment on that company’s potential interest in Hostess assets. Bimbo, based in Horsham, Pennsylvania, is the U.S. division of Mexico’s Grupo Bimbo SAB, the maker of Entenmann’s cakes and Thomas’ English muffins.
‘Death Spiral’
Even before the strike, Hostess endured years of declining sales as Americans turned to rivals’ snacks and breads, while ingredient costs and labor expenses climbed.
Tim Ramey, an analyst for D.A. Davidson & Co., said he expects Twinkies and other Hostess brands to disappear from the marketplace. Any buyer would need a distribution system to get the products into stores, he said.
For More Videos and information :: Click HERE
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