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Twinkies reborn; Hostess out of bankruptcy and going public

Even the doomed Twinkie cake can emerge strong from a bankruptcy. Not seen so much in Pennsylvania, where the Tastykake brand remains supreme, the Twinkie was nonetheless the nation’s best known sweet-tooth junk-food indulgence for many years. The company had to choose bankruptcy, however, in 2012 as a result of the trend toward eating healthier foods and internal union issues within the Hostess Brands parent company.

Although many news reports treated the moves as the death knell for Hostess and its star product, the Twinkie, the company emerged from bankruptcy last year and now has a market value of about $2.3 billion and a streamlined workforce down to 1,170 from some 22,000 in its heyday. The company showed $650 million in revenue for the 12-month period preceding May 31. The resurrection is due to private-equity funding to bring the company out of bankruptcy.

The company emerged from bankruptcy based on the investment of $410 million made in 2013 by C. Dean Metropoulos, a billionaire food-industry investor. To solidify the deal, Metropoulos and a private-equity firm are taking the company public with a listing on the Nasdaq exchange that will start this fall. These moves once again demonstrate how bankruptcy can function to obtain new financing, trim costs and debt, and emerge infused with a solid capital base.

It is unclear whether the owners intend to bring health-conscious products into its retail line, but so far it does not appear so. All of the steady standbys remain, such as Ho Hos, Fruit Pies, Ding Dongs and Donettes. In addition, the company has reportedly tweaked its recipes to increase the already renowned long shelf-life of the products. That is somewhat puzzling, considering that it means additional preservatives, not a favorite of the health food segment of the population. As indicated earlier, the Tastykake hold on Pennsylvania markets is well-established, but look for the Twinkies brand to be bigger than ever during the company’s dramatic rebirth after it sought shelter in bankruptcy a few years back.

Source: The Washington Post, “What it took to save the Twinkie“, Drew Harwell, July 5, 2016