Hostess Liquidation Sets Off Online Twinkie Run

As Hostess Brands, Inc. – the 80-plus-year-old baker of such iconic brands as Twinkies, HoHos, Hostess CupCakes, DingDongs and Wonder Bread – enters into liquidation and probable acquisition, the online price of the sugar-filled delicacies is soaring.

As soon as Hostess announced the end of production, Twinkie lovers started scrambling to buy every Twinkie they could find.  In some cases, the buyers visited eBay and Craigslist to sell their hoards – presumably at a significant profit.  Price tags for a box of 10 Twinkies hit four and even five digits; the retail price is in the $5 range.  One enterprising eBay seller, who is asking $10,000 for a box of Twinkies, has vowed to donate 10 percent of the proceeds to local charities.  Despite the conventional wisdom about the longevity of Twinkies, the majority purchased in mid-November will be past their sell date in approximately one month.

Chances are that another company will buy out Hostess Brands and breathe new life into its products.  The most likely purchaser is C. Dean Metropoulos and Co., a private-equity firm that specializes in resurrecting troubled heritage brands, such as Pabst Blue Ribbon beer, Bumble Bee Tuna, Chef Boyardee pasta, and PAM cooking spray.  Of greatest value to any purchaser are Hostess’ intellectual property rights, which allow the manufacture and sale of the brand’s flagship products.

Hostess’ intrinsic brand value means that acquiring the name is a good business decision for the eventual buyer. According to Michael J. De La Merced, “One company’s castoffs can be another company’s golden goose — or in this case, cream-filled confection.  It is a common trade in bankruptcy court.  Sellers are hoping to drum up cash for their creditors, and buyers are betting they can revive the brands.  Even though consumers are increasingly crunching on kale, Twinkies and other sugary snacks still make loads of money.  Hostess makes billions of dollars of sales each year.”

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