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Hostess Brands: Let the bidding commence…

By Kacey Culliney , 22-Nov-2012

Twinkies, Wonder Bread, Ding Dongs et al. are up for sale as Hostess Brands wins approval to wind down operations and sell all assets.

The US Bankruptcy Court for the Southern District of New York finalized its approval yesterday.

The shut-down will be completed in one year and see closures of 33 bakeries, 565 distribution centers, around 5,500 delivery routes, 570 bakery outlet stores and 18,500 job losses.

The firm said it expects employee headcount to shrink 94% within the first 16 weeks. A 3,200-strong workforce will be kept to oversee and implement the initial phase of the wind down process, it said.

The tug of war: Hostess v BCTGM

Hostess initially filed its request for a full business closure on Friday 16 but the judge rejected the motion and forced the Twinkie maker and striking union BCTGM to enter into mediation talks.

The talks with the Bakery, Confectionery, Tobacco and Grain Millers Union however, proved ‘unsuccessful’ and the Hostess motion has now been cleared.

“Hostess Brands is winding down the company after a nationwide strike initiated by the BCTGM that commenced on November 9 crippled its operations at a time when the company lacked the financial resources to survive a significant labor action,” the Twinkies maker said in its latest statement.

“The wind down was necessitated by an inflated cost structure that put the company at a profound competitive disadvantage,” it continued.

However, as business shuts up, the BCTGM stands by its argument that Hostess Brands suffered financially due to gross mismanagement over many years and underwent a “slow demise”.

Hostess Brands majority workers union Teamsters branded it “a sad day for thousands of families affected by the closing of this company”. It said it would work hard to support its 6,700 Hostess employees in securing benefits and ensure owed wages are honored.

Who wants a bite of Hostess?

Mexican bread titan Grupo Bimbo is among the big names heading to the table, according to analysts. Although it has been noted it could be a little too soon after its Sara Lee buy last year that it is still working to absorb. Campbell Soup Company is another big player that analysts have suggested could be set to put in an offer.

However, Matt Hudak, research analyst at Euromonitor International, told this site the sale is highly likely to go to a private equity firm, as the brands and company will need pushing forward with knowledge.

Hudak also said offers could be expected from ‘outsiders’ like Kellogg and Kraft.

Hostess Brands has said it is up for sale “to the highest bidder”...

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