After a decade of bankruptcies and fights with its Teamster drivers and Bakery, Tobacco and Confectionery plant workers, the current bosses at Hostess Brands say they are shutting down their bakery in Northeast Philadelphia, laying off 300 workers; closing distribution centers in King of Prussia, Wilmington, and South Jersey; laying off 18,500 in closing all bakeries and warehouses nationwide; and seeking a bankruptcy liquidation sale.
Who are the likely buyers of Twinkies, Hostess cupcakes, Drake's Cakes, Wonder Bread, Ring Dings, and dozens more iconic fatty snack brands?
Sales of many of these products have been slipping for years; in their efforts to shore up profits, Hostess and predecessor Interstate Bakeries have been unable to convince union workers to give up pensions and other pay and benefits.
So the creditors want someone else to try. "They'll sell to the highest bidder," suggests Robert Costello, boss of $55 million asset Costello Asset Management in Huntingdon Valley, and a former stock analyst who covered Tastykake and other foodmakers.
The many possible buyers of one or more Hostess brands include three big Philadelphia-area employers:
- Horsham-based, Mexican-owned Bimbo Bakeries USA, owner of Arnold's, Thomas' English Muffins, Stroehmann's, Entenmann's and dozens more brands -- though Bimbo is already so big another acquisition could face antitrust protests;
- Georgia-based Flowers Foods, which owns Tastykake and is expanding production of its own sliced sandwich bread lines at its Oxford, Chester County bakery;
- J&J Snack Foods, the Pennsauken-based owner of dozens of frozen, cafeteria and packaged snacks lines, and a major supplier to Wawa and other retailers.
Maybe buyout firms and other private equity financiers will compete with bakeries to bid for some of the brands, notes Stephanie McAlaine, of the Philadelphia chapter of the Association for Corporate Growth.