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Twinkies and the sweetest comeback ever

When Hostess Brands, LLC announced that it was filing for bankruptcy eight months ago, the nation let out a collective gasp.  For many of us, these delicious--albeit non-nutritious--snack cakes had been an institution for generations.  Surely if these cream-filled cakes could survive a nuclear explosion then they could survive bankruptcy as well.  But alas, production of Twinkies halted in November which led to numerous people hoarding large quantities while they still could and some even selling them on eBay for a steep premium.

But when two investing firms learned about the love people still had for the snack cakes, it was decided that it needed to be resurrected and fast.  So in March, the private equity firm Appollo Global Management and the venture capital firm C. Dean Metropoulos and Co., bought Hostess' cake division for $400 million.

As some of our readers here in Texas can imagine, a business acquisition such as this takes time and careful planning. This is especially true because of the state of Hostess when the acquisition took place. With bankruptcy, companies need to make sure that any purchases or sales do not interfere with a bankruptcy petition and must keep the courts informed so as to avoid any difficult litigation in the future. Such may have been the case in this situation as well considering the fact that the Twinkie would continue to be branded under the Hostess name despite its financial woes.

Now, the two new firms are planning the Twinkie's comeback even working on a new marketing campaign that would not only reel in moms looking for lunch box items but young adult males working their way through college. By expanding the product's distribution to convenience stores, the firms also hope to expand to other demographics who may not have been as inclined to purchase the snack cakes in the past. The hope now is that the investment in Twinkies will pay out in the long run, even after the buzz of the relaunch subsides.

Source: Time Business and Money, "The Rebirth of Twinkies: Now for Dudes -- and Suddenly Everywhere," Josh Sanburn, July 15, 2013

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