The past couple of years have seen a handful of high-profile businesses file for bankruptcy. Kodak and American Airlines are names that consumers have known for decades. Each company has a unique story of creditors and saleable assets.
Hostess Brands Inc., too, is gradually making its way through Chapter 11 bankruptcy. The company failed to resolve a strike that idled its workers and factories in the fall and filed for bankruptcy protection in December. Reports are that the company’s assets will go to auction in March; the sale will help to offset Hostess’ significant liabilities.
Two private equity firms recently bid on Hostess’ snack cake brands, including Hostess Twinkies and Ho Hos and Dolly Madison goods. The bid is a “stalking horse,” meaning that it came in at the request of Hostess and sets the floor for bids at auction. The least Hostess will get for the brands, some equipment and the five bakeries covered by the bid is $410 million.
According to one bidding firm’s executives, the acquisition of Hostess brands presents an opportunity for growth and a chance to expand the firm’s distribution network. The objective for the other bidding firm is to bring the brands back to American tables and lunchboxes. That firm already has partial ownership of such familiar brands as Duncan Hines baking mixes, Swanson frozen dinners and Vlasic pickles.
For Hostess, the priority is to avoid breaking up the snack businesses. The company opened its doors more than 80 years ago and is still privately held. Another company has placed a stalking horse bid of $440 million on the bread business.
The court must approve both sales.
Source: Reuters, “Apollo, Metropoulos submit $410 million offer for Hostess Twinkies,” Nicholas Wapshott, Jan. 30, 2013
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