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Exclusive: Sun Capital wants to buy Hostess

November 19, 2012: 12:43 PM ET

Hostess may have a buyer.

FORTUNE -- Private equity firm Sun Capital Partners wants to buy bankrupt bakery Hostess Brands Inc., Fortune has learned.

The proposal would be to operate Hostess as a going concern, including reopening the shuttered factories and continuing union representation of Hostess workers.

Sun Capital privately expressed interest in acquiring Hostess earlier this year, but the bakery's creditors chose for an alternate reorganization plan that ultimately failed. Following Friday's liquidation, Sun reengaged by contacting Hostess advisor Perella Weinberg Partners. It also plans to contact the relevant labor unions.

"I think that we could offer a slightly better, more labor-friendly deal than what was on the table last week," says Sun co-CEO Marc Leder, in an interview with Fortune. "We also think that one point the unions have made is that there hasn't been a great amount of reinvestment in the business. We've found that investing new capital into companies like this can be very positive for brand, people and profitability... We would look to invest in newer, more modern, manufacturing assets that would enable the company to become more productive and to innovate."

MORE: The end of Hostess

Sun's earlier proposal would have maintained the existing lenders -- led by Silver Point Capital and Monarch Alternative Capital -- and would expect to do the same this time around. But Sun also believes that it could "make the company immediately profitable on an EBITDA basis," which could open the door for the current lenders to exit and new ones to step in.

Leder also thinks that Hostess would be a relatively easy company to restart, particularly given that most of its vendors still have empty shelves where Hostess products used to reside. Moreover, he doesn't buy the argument that Hostess is a long-term loser due to the changing American diet:

MORE: Don't worry, Twinkies will survive

"Do you see M&Ms or Mars having any trouble? Or Haagen Dazs or Godiva? People like to indulge in desserts. Obviously you don't eat only Twinkies for breakfast, lunch and dinner, but people love them as a snack."

Sun Capital is based in Boca Raton, Fla. and focuses on companies with significant challenges (including those in bankruptcy). It currently is in the process of raising $3 billion for its sixth fund. Notable portfolio companies in the food and beverage space include Contessa, Creekstone Farms and Harry's Fresh Foods.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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