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Originally published Friday, April 19, 2013 at 12:41 PM

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Franz Bakery buys Hostess Cake bakeries

The former Hostess Cake factory in Seattle has been sold for $10.5 million to Portland-based United States Bakery, better known as Franz Bakery, as part of a wider deal that will dramatically expand the family-owned firm’s Pacific Northwest operations.

Seattle Times business reporter

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The former Hostess Cake factory in Seattle has been sold for $10.5 million to Portland-based United States Bakery, better known as Franz Bakery, as part of a wider deal that will dramatically expand the family-owned firm’s Pacific Northwest operations.

The company received the green light earlier this month from the U.S. Bankruptcy Court in Manhattan to purchase all of Hostess Brands’ Northwest assets for $30.85 million in cash, court records show.

The purchase includes four bakery plants, 14 depots and a fleet of vehicles — a collection of assets scattered across Washington, Montana, Idaho, Alaska and Utah. Hostess also sold its Eddy’s, Grandma Emilie’s, Sweetheart and Standish Farms brands to the Portland company as part of the deal, but not its best-known snacks, such as Twinkies and Ho Hos.

The sweet smell of snack cakes wafted from the Hostess factory at 434 Aurora Ave. N. for decades, a familiar memory to commuters and passers-by.

It’s not clear what will happen to it now.

Franz President Marc Albers said through a spokesperson that it was too soon to comment on the company’s plans for the property and the other acquired assets.

Franz already had three plants in Washington state — two in Seattle and one in Spokane, according to its website. The two Seattle plants in Sodo and the Central Area are significantly larger than the one it just bought, public records show.

Franz describes itself as “the largest family-owned independent bakery on the West Coast,” with a history going back to 1906.

The company supplies restaurants and grocers with fresh bread, buns, bagels, cookies and pastries. It sells products under regional bakeries’ names, such as Franz, Gai’s and Snyder’s, as well as brands such as Bay City, Seattle International, Mc-­ Kenzie Farms, Svenhard’s, and Aunt Katie’s.

Its website lists 7 bakery plants in Oregon, Washington and Idaho.

Hostess filed for Chapter 11 bankruptcy protection in January 2012. It later said it would lay off 250 Washington workers in July, the majority in the Seattle area.

After failed mediation talks with its bakers union, Hostess announced in November it was liquidating its assets — 33 bakeries, 565 distribution centers and 570 bakery outlets — and eliminating 18,500 jobs nationwide.

Franz outbid two others — a subsidiary of Mexico’s largest baking company and a Los Angeles investment firm — and the sale was approved by the bankruptcy court April 9.

The Seattle Hostess plant stands out in a neighborhood once home mostly to light industrial and warehouse tenants.

South Lake Union has become the city’s hottest office submarket, with tenants like Amazon.com, the Bill & Melinda Gates Foundation and the University of Washington occupying new glass-and-steel buildings.

Most industrial bakeries in the region now are located either in Seattle’s Sodo neighborhood or the Kent Valley, said Craig Hogan, a Seattle partner at brokerage Kidder Mathews who focuses on industrial real estate in those areas.

“South Lake Union is no longer a viable industrial neighborhood because of the economics,” he said.

If a bakery’s core clients are in the Seattle central business district, then it makes sense to locate in or near downtown to avoid the high cost of transporting the goods in from the Kent Valley, he said.

Sanjay Bhatt: 206-464-3103

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