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Hostess Brands May Not Survive But Iconic Twinkie Will

Daily Ticker

Twinkie fans may soon have reason to rejoice.

The iconic junk food snack could return to store shelves if Hostess, maker of the Twinkie, Wonder Bread, Ho Ho's and Ding Dongs brands, and private equity firm Sun Capital Partners agree to a deal.

According to Dan Primack, senior editor at Fortune.com, Sun wants to buy the 82-year-old bankrupt company and even expressed interest in an acquisition of Hostess Brands earlier in the year. Hostess announced last week that it would enter liquidation because of a nationwide strike by the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) Union. Hostess Brands CEO Gregory Rayburn said the strike had halted production at two-thirds of the company's factories across the country.

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BCTGM union members went on strike Nov. 9 to protest the wage and benefit cuts that Hostess had been seeking to reduce its operating expenses. Hostess management decided to lay off nearly all of its 18,500 employees and shut down its factories as a result of the strike; product shipments would continue until the remaining supply runs out.

The beleaguered Hostess Brands faced serious financial pressure before the union strike. The company had filed for Chapter 11 bankruptcy protection in January. On Monday Hostess, at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, agreed to enter private mediation with its lenders and union leaders to prevent liquidation.

Primack says in an interview with The Daily Ticker that "there's plenty of blame" to be shared for the company's demise.

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If Sun acquired Hostess, Primack says the firm would likely keep the majority of Hostess' employees as well as reinvest in the company's manufacturing infrastructure. Any deal between Sun and Hostess would have to be approved by union leaders, Primack notes. But whether it's Sun or another snack maker that buys Hostess, it appears likely that the Twinkie brand will survive the recent turmoil.

"In a year or two there will still be a Twinkie in the super market," Primack says.

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