Two Dozen line up to bid for Hostess

Hostess Said to Attract Bids From Wal-Mart, Kroger
Excerpt:

Wal-Mart Stores Inc. (WMT) and Kroger Co. (KR) are among the bidders for assets being sold by Hostess Brands Inc., the bankrupt maker of Wonder bread and Twinkies, said a person familiar with the matter.

There are about two dozen bidders, said the person, who asked not to be named because the process is confidential. Last month, financial adviser Joshua Scherer of Perella Weinberg Partners LP said the liquidation sale may generate about $1 billion.

A few of the bids are for all the assets, some are for just the cakes or breads businesses, and others are interested in individual Hostess plants or products, according to the person. Other first-round bidders include Grupo Bimbo SAB and Alpha Baking Co., the person said.

Comment: Not familiar with Alpha Bakery. Wal-Mart and Kroger are a surprise to me

Man who has been "unemployed practically [his] whole life." offers to buy Hostess

The Fight to Buy Hostess: Main Street vs. Wall Street
Excerpt:

Of the two thousand Hostess Brands documents filed in the last year with the U.S. Bankruptcy Court, it's one of the most recent ones - a handwritten, five-page letter on loose-leaf notebook paper - that stands out the most.

In document #1890, Don Sheridan of Wellesley, Mass., writes to say the Judge, the CEO, and the company's advisers should allow him to prepare a proposal for the Twinkie maker and its 30 brands.

... Sheridan would hardly seem a viable competitor. He is 59 years old, battling cerebral palsy and living on welfare. His academic qualifications are slim: He flunked out of accounting school at a younger age and, in conversations over the phone, describes himself as being "unemployed practically [his] whole life."

Comment: This is not "The Onion" - documentation

Frank "Not-Hurt"

The sweet life of Bakery Union officials
Excerpt:

Soon to be or newly jobless Bakery, Confectionery, Tobacco Workers and Grain Millers Union members who work(ed) at Twinkie and Ding Dong maker Hostess Baking are contemplating a bleak Christmas that not even a trip to low cost, non union WalMart can alleviate. However the Bakery Workers' union's officials are quite comfortable

Comment: Out of touch union leaders!

Flowers to pick up some Hostess Brands?

Flowers Foods Sizes Up Hostess
Excerpt:

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)

Arcane union rules tanked Hostess

Harder to Digest than Twinkies
Excerpt:

• No truck could carry both bread and snacks even when going to the same location
• Drivers were not permitted to load their own trucks
• Workers who loaded bread were not allowed to also load snacks
• Bringing products from back rooms to shelves required another set of union employees
• Multi-Employer pension obligations made Hostess liable for other, previously bankrupted, retirement plan contributions from employees that never worked for Hostess at all

Comment: Full article has much more

Answering "Bain Ate the Twinkie"

Who killed Hostess?
Excerpts:

The left is madly spinning (aka, lying about) the impending demise of Hostess, trying to blame the free enterprise system, and even Mitt Romney's former firm, Bain Capital. This is a lie. It was inside job of the left, with a prominent Democrat helping himself to consulting fees and a hundred thousand dollars a year sinecure for his son.

... While the unions and their media allies like to cite executive salaries and consulting fees paid to executives as outrageous, they are ignoring left winger Dick Gephardt cashing in for himself, and more outrageously, for his son, who was appointed to the Hostess Board and paid one hundred thousand dollars a year.

... Allowing the media and labor bosses to spin Hostess as the fault of Mitt Romney is simply ridiculous.

Comment: Bane Ate the Twinkie. I love the graphic (red boxed above).

As the Twinkie Turns

Twinkie's last stand: It's up to a mediator

Excerpt:

Twinkie the Kid’s ride into the sunset hit a hurdle Monday when Hostess Brands, unions and lenders agreed to mediation to try to save the company, and its spongy, yellow cake, from liquidation.

The decision staves off, for a couple of days at least, Hostess’ plans to shut down its 33 factories and lay off 18,500 workers after an acrimonious labor dispute that could lead to the end of the 82-year-old company and its well-known brands such as Twinkies, Ho-Hos, Sno-Balls and Wonder bread.

During the hearing, U.S. Bankruptcy Judge Robert Drain urged the parties to come to an agreement through mediation rather than through a public, and costly, hearing. The court called a short recess while the lawyer for the baker's union phoned his client to see if the union would agree to a mediation process tomorrow.

After the recess, the sides agreed to a mediation session Tuesday at 1 p.m. ET to try to work things out. If they can't resolve it, and come to an understanding of the underlying motives behind the worker strike that the company said crippled its business, the bankruptcy hearing will resume Wednesday at 11 a.m ET.

The sides will probably come to an agreement on Tuesday, John Pottow, a bankruptcy law professor at the University of Michigan, told TODAY. The biggest sign, he said, is that the Teamsters were on board.

"The Teamsters aren't pussycats," said Pottow. "If they're saying 'this is as good as it gets,' that's a pretty strong signal to me."

Comment: The following article may be premature but still interesting

Who Killed Hostess?

The list:

1. The Bakers Union at the Negotiating Table with a Picket Sign
2. Management at the Executive Suite with a Checkbook (the counter-narrative )
3. The Free Market at the Grocery Store with Competition: Hostess's sales last year — $2.5 billion — were down about 11% from 2008 and down 28% from 2004
4. The Sugar Lobby in the Halls of Congress with Tariffs (this one has an interesting angle!
5. Rich People on Giant Yachts with Their Armies of Servants

Comment: It's probably a combination of 1,2,3,4. I don't know anyone who buys the junk food from Hostess

Grupo Bimbo to buy Hostess whole or in parts?

The Twinkie: Will it return as a Mexican expat?

Excerpt:

The brands “most likely will be purchased by a competitor that will bolt the additional sales to a more efficient delivery system,” David Pauker, a food industry restructuring specialist, tells Reuters. “The company itself won't survive.”

Food producers ConAgra and Flowers Food, the American company behind Nature Valley granola, have expressed interest and so has Little Debbie baker McKee Foods.

But another possible bidder hints at the future of Twinkies and maybe the US bakery business as a whole: Mexico’s Grupo Bimbo, the world’s largest bread baking firm, which already owns parts of Sara Lee, Entenmann’s and Thomas English Muffins.

Bimbo has already sniffed around the bankruptcy proceedings that have haunted Hostess for a decade, in a bid to further expand its North American portfolio and pad its $4 billion net worth. Bimbo reportedly put in a low-ball bid of $580 million a few years ago, Forbes reports, and may be rewarded for that move since the Hostess kit-and-kaboodle may fetch more like $135 million today.

Comment: I hope NOT ConAgra because I have CAG stock! The Grupo Bimbo ADR is GRBMF.

Bane ate the Twinkie

Union: 'Bain-style' killing of Twinkie
Excerpt:

“What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor,” Trumka said in a public statement. “Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price.”

Comment: Bane is the bad guy from Batman (too stupid for my taste) .... Bain is the Romney "evil machine". While the AFL-CIO head truly made this claim ... it has as much nutritional value as a ho-hos

Hostess shutdown images

Comments (websites):

• Jacksonville news (Plant still open but article is out of date)
• hostessbrands.info (info for suppliers, employees, etc)
• www.hostessbrands.com
• bctgm.org

Hostess strikers: "Do it, shut it down"

Striking workers defy Hostess' demands - Company is expected to announce Friday whether it will follow through on threats to shut down

Excerpt:

Production at about a dozen of the company’s 33 plants, including the longtime Indianapolis plant at Shadeland Avenue and 30th Street, has been seriously affected by the strike, said Lance Ignon, a Hostess spokesman. He said a decision on liquidating the company may not come until this morning, after it’s had a chance to assess plant operations late Thursday. “Do it, shut it down,” a woman yelled at 5 p.m. Thursday from the picket line formed at the East 30th Street gate of the Indianapolis plant. As many as 45 people in the picket line chanted, “No pension, no deal,” as they walked a tight circle in the growing cold and gathering darkness.

Comment: The WSJ has complete coverage today. Ironically the brands will probably live on (perhaps Grupo Bimbo) but 18,000 workers are on the street.