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Don’t worry, Twinkies will survive

By
Dan Primack
Dan Primack
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By
Dan Primack
Dan Primack
Down Arrow Button Icon
November 16, 2012, 4:51 PM ET

FORTUNE — Twinkies are going to be around for a long time to come. And not just because they’re the foodstuff of choice for the zombie apocalypse.

Yes, Hostess Brands today began liquidation. Yes, all of the bakers lost their jobs (they weren’t willing to make a deal). So did the delivery truck drivers (they were). And it’s true that the last batches of Hostess Brand(ed) treats were sent out last night, and the ovens were fired down.

But that doesn’t mean that Twinkies are gone forever, despite the sugar scare tactics of websites like HuffingtonPost:



What else would you expect from a news source that includes a “healthy living” vertical?

The truth is that the Twinkies brand still has value, and will be acquired. Same for Ding Dongs. And (probably) Wonder Bread. America may be undergoing major demographic shifts, but empty calories cut across age, gender and ethnicity. If the next generation’s Twinkies don’t have “Hostess” stamped on them, so be it. I’m not even certain the ironic heart carries much weight in our post-Saturday morning cartoon world.

The most likely endgame here is that another bakery snaps up Twinkies, and separates it from the Hostess snack brands (which include Drake’s Cakes). There also is a small chance that private equity tries to buy the whole thing, now that it would be free of existing pension liabilities. Again, I don’t think it’s likely, but here would be my frontrunners:

  • KPS Capital Partners. They didn’t seem to express much interest over the summer when Hostess was flailing, but it is a turnaround firm with recent experience in the food/beverage packaged good sector (okay, it was beer). KPS also has a history of working with organized labor, including The Teamsters (including on the beer deal).
  • Sun Capital Partners: Probably the country’s most active turnaround firm, and also one with a small packaged foods practice. Sun Capital also is raising $3 billion for its new fund, so capital wouldn’t be an issue.
  • Invus: These are the guys who turned around Keebler, which eventually went public before being acquired by Kellogg’s (K).
  • Lion Capital: This is a moonshot among long-shots, but I’d be remiss in not including Lion as part of any list of private equity firms on a food deal. Kettle chips, Bumble Bee tuna, etc. My hesitance relates to Lion’s tendancy to avoid distressed plays.

KPS declined to comment, and I haven’t yet heard back from the other three firms.

But, again, don’t worry about Twinkies. After all, there was enough demand last year to make 500 million of them. Someone will buy it, and they’ll look exactly the same. Even if someone besides Hostess is making them.

Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com

About the Author
By Dan Primack
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