According to a Reuters report, world-renowned Twinkies maker Hostess Brands may sell to the most interested buyer.
Twinkies Almost Under New Managment
Hostess Brands Inc, the maker of Twinkies snack cakes, is exploring a sale after fielding takeover interest from major snack food makers, people familiar with the matter said on Friday.
Hostess became an acquisition target after it raised prices on some of its products to boost revenue, fueling investor concerns over its prospects. Before the news of the company exploring a sale, its shares were down 1% year-to-date versus a 29% rise in the Nasdaq Composite Index.
How They’re Made
The Twinkies 1.0 era dates back to 1930, a creation of James A. Dewar for Continental Baking, best known at the time as the maker of Wonder Bread. Dewar was a plant manager specializing in strawberry shortcakes limited to strawberry season.
So Dewar came up with the idea of cream-filled shortcakes instead. A big hit, they developed into a ubiquitous snack staple in post-World War II America and beyond. A quintessential mass-market product, the Twinkie was convenient, consistent, and vaguely industrial, with its molded shape and injected cream-like filling.
Continental Baking went through various corporate arrangements, owned by telecom giant ITT and pet food maker Ralston Purina. In the 1990s, it was sold to Interstate Bakeries Corporation.
Over the following decade, changing tastes, diets, and health priorities started eating into Twinkie sales. In 2004, as one Twinkies timeline put it, “Interstate succumbed to the low-carb Atkins and South Beach Diets, filing for Chapter 11 bankruptcy protection.”
Interstate emerged from bankruptcy in 2009 and was renamed Hostess, and it was back in bankruptcy court three years later.
Leaders blamed union demands; employees blamed management’s failure to modernize.
This time, Hostess liquidated, closing its U.S. plants, laying off its more than 18,000 employees—and ceasing production of Twinkies and the rest of its snack repertoire, including Ding Dongs and its flagship Hostess CupCakes, as well as Wonder and other baked goods.
When Hostess shut down, the company produced a reported 500 million Twinkies a year. People freaked out, snapping up Twinkies and other Hostess goodies and sometimes even trying to sell snack stashes on eBay.
The remnants of Hostess (including its intellectual property and recipes) were bought in 2013 by private equity firms Apollo Global Management and Metropoulos & Co. for around $410 million.
According to the company, Hostess has seen its product sales grow by more than 12% annually over the past five years. Today, it produces 400 million Twinkies a year.
Today’s Hostess is a profitable business, albeit more focused, with fewer factories and a smaller workforce of about 3,000 employees, a drastic reduction from its heyday.
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