Supermarket Companies Profiles

Hostess Brands Inc Union Talks Fail Liquidation Next,bankruptcy,ripplewood holdings, twinkies wonder bread drake's

               With $2.50 billion in annual revenue, Hostess Brands is the 170th largest private company in the United States (November 2011 per Forbes).  Hostess's recent financial struggles didn't become widely known until December 2011 when the company

stated that it was on the verge of filing for bankruptcy due to lingering financial difficulties stemming from pensions and other union-related obligations.  A month later, Hostess estimated total company debt to be $860 million which is nearly twice what it was in 2004, the last time it went bankrupt ($450 million).  In March, Hostess CEO Brian Driscoll was replaced by Gregory Rayburn;  Throughout the bankruptcy period, workers have constantly called out company leaders for their 'poor management' practices.  Fueling emloyee anger and distrust were reports that the salaries of company execs had nearly doubled in 2011.  15,000 of the 18,500 employees are members of one of two union groups : Hostess Teamsters Union, Bakery Union.  Hostess operates 33 plants, 565 distribution centers, 570 bakery outlets and 5500 delivery routes.

Update - On November 20, 2012 Hostess said that last ditch mediation talks between it and the Bakery-Confectionary-Tobacco-Grain Millers Union had failed, forcing the company closer to dissolution - the next phase is liquidation. Hostess owes the union $2 billion in unfunded pension liabilities.

This is the second time that the company has filed for bankruptcy.  Hostess first went bankrupt back in September 2004 only nine years after the company nearly doubled in size when it acquired Wonder  Bread, Twinkies, Ding Dong and other Hostess Brands in 1995 for $330 million and 16.9 million stock shares.  The company had traded publicly during two periods, first was prior to 1987 when it was known as IBC Holdings, the second period was from 1991 to 2004.  The first bankruptcy period began in 2004 and lasted

five years during which time the company's stock lost more than 90% of its value, forcing it to layoff a third of its workforce.  In February 2009 it emerged from bankruptcy as a private company half owned by the investment firm Ripplewood Holdings (headed by Tim Collins) which remains until today the majority owner.  Nine months later, in November 2009 the company was renamed Hostess Brands Inc after the baked goods division.  Since the turn of the millenium, Ripplewood has been involved in good deals (billion dollar turnaround of Bank of Japan, Shinshei Bank) and bad ones (Reader's Digest bankruptcy cost Ripplewood $275 million).

Key Notes: 

  • In Canada (Loblaws) and Mexico (Grupo Bimbo) Hostess Brands does not own the rights to Wonderbread
  • Hostess Brands is not associated with Canada's Hostess potato chips (Frito Lay Canada, PepsiCo)
  • Since Hostress Brands is a private company any stated financial information is only an estimate
  • Hostess brands:  Nature's Pride, Dolly Madison, Butternut Breads, Wonder Bread (acquired along with Hostess Brands in 1995 $330 million takeover of Continental Bakery Company).  Dave's brands acquired from leveraged buyout in 2009:  Yodels, Yankee Doodles, Sunny Doodles, Funny Bones, coffee cake
  • Mars, Inc:  The largest private company engaged in the distribution of confectionary products is Mars Incorporated which ranks #3 on the list (chocolate bars twix, mars, 3 musketeers, wrigley gum, milky way, snickers, uncle ben's rice, pedigree whiskas cat food, dove soap).  Mars 2011 sales:  $30 billion
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