Hostess attracts 24 firms in first round of bidding

Wal-Mart Stores and Kroger, Grupo Bimbo and Alpha Baking are among the 24 companies that have participated in the first round of bidding to acquire the assets of Hostess Brands, the bankrupt producer of bakery products.

While some companies are interested in acquiring all the assets, others are planning to purchase a part of the business, such as the Hostess facilities, brands, or cakes / breads businesses, reported Bloomberg.

The acquisition of one or more brands by Wal-Mart or Kroger would ensure that Hostess products are widely available in the US; Wal-Mart owns nearly 4,479 Wal-Mart and Sam’s Club stores, while Kroger operates 3,226 grocery and convenience stores in the country.

Initial bids are expected to be finalised for various brands by January 2013, with an auction following and the proceeds from the sale used by Hostess Brands to pay its creditors.

Hostess Brands is estimated to be worth about $2.4bn. It has been affected by increasing debts, soaring labour costs and the changing tastes of consumers. The company filed for bankruptcy in January 2012 for the second time in its history, declaring assets of $982m and debt of $1.43bn.

In November, the company announced that it would be closing its business and sell its assets, leading to a loss of up to 18,500 jobs.

The US Bankruptcy Court in New York had authorised the liquidation process after Hostess Brands and the Bakery, Confectionery, Tobacco and Grain Millers Union (BCTGM) were unable to resolve their differences during a mediation session, which was aimed at saving the company.

The liquidation is expected to be completed in one year and will lead to the closure of 33 bakeries, 565 distribution centres, approximately 5,500 delivery routes and 570 bakery outlets across the US.

It will also lead to the divestment of brands such as Hostess, Drakes and Dolly Madison, Twinkies, CupCakes, Ding Dongs, Wonder, and Nature’s Pride, among others.