Flowers to pick up some Hostess Brands?

Flowers Foods Sizes Up Hostess

The Thomasville, Ga., company is considered a likely bidder for some of the assets owned by Hostess, which last week was granted permission by a federal bankruptcy-court judge to begin liquidating. The end came after a contentious bankruptcy that began in January and culminated this month in a strike.

... Considered an efficient operator with a solid management team, Flowers started out as a bakery owned by the Flowers brothers in 1919, producing 30,000 loaves of bread a day. Over the years it has acquired numerous other makers of bread, rolls and snack cakes. But its presence is still largely concentrated in the Southern U.S. Based on that geographical concentration, Hostess is an attractive target, with its nationwide distribution of Twinkies, Ho Hos and Ding Dongs.

With $2.8 billion in revenue last year, Flowers is projecting sales to rise 7% to 9% in fiscal 2012 and earnings per share to increase 3.5% to 5%. Flowers reported a profit of $31.2 million in the third quarter ended Oct. 6, up from $31 million a year earlier. Sales rose 6.2% to $717.3 million. The stock is up 18% so far this year.

Flowers is unlikely to rehire Hostess employees as union workers, analysts said. It has been clear with investors that it isn't interested in assuming labor contracts, said BMO Capital Markets analyst Amit Sharma and other analysts. More than 90% of Flowers's workforce is nonunion, analysts estimate.

Flowers plants have been running under capacity after a recent expansion for a private-label customer proved overly ambitious, the company has said. That extra capacity could make an acquisition of some Hostess snack cakes even more attractive, analysts say. "If Flowers were to buy some Hostess snack cakes, it would help them utilize their excess production capacity," said BMO's Mr. Sharma.
Comment: Corporate site (image is screen grab). Stock quote FLO (image below)


  1. More from the article:

    Flowers has acquired more than 100 companies since 1968, when it went public. Most of them have been small, closely held bakeries with nonunionized workforces, Mr. Jagdale said. That is in stark contrast to Hostess, which over the years bought large companies that had major union representation.

  2. 1/12/13: Flowers Foods Sets Wonder Bread Bid:

    Flowers, the Thomasville, Ga.-based maker of Tastykakes and Nature's Own breads, is offering up to $360 million in cash for one pool of assets, which includes five major Hostess bread brands, 20 plants and 38 depots. In addition, the baking company is offering $30 million for Hostess's Beefsteak rye brand.


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