Love's Bakery, the state's largest supplier of bread and baked products, will be acquired by its local management.

Japan-based First Baking Co. agreed to sell the 157-year-old company to a team headed by Daiichiya-Love's Bakery president Mike Walters.

Terms of the deal were not disclosed.

The sale is expected to close in 60 days and Love's said all 349 of its workers will be retained.

"It's back to local management," Walters said by telephone yesterday.

"This agreement will preserve the jobs of our 349 employees and our ability to produce freshly baked bread right here in Hawai'i."

Founded in 1851, the company's brands include Love's, Wonder Bread, Roman Meal, Hostess and Svenhard's Pastries. Love's distributes about 400,000 loaves of bread each week.

The buyers said they plan to beef up the company's Middle Street plant by investing in new boilers and air compressors. Love's also plans to upgrade its trucking fleet and will look at ways of cutting its distribution costs to the Neighbor Islands.

The company made national headlines shortly after the March 31 shutdown of Aloha Airlines. Love's, Aloha Cargo's largest customer, had to reroute much of the baked goods destined for the Neighbor Islands to Los Angeles. The baked goods were then reloaded on other commercial passenger planes headed directly to Neighbor Island airports.

The crisis was averted after Aloha was sold to Saltchuk Resources Inc., the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge.

SEEKING SHIPPING DEAL

Walters said the company is negotiating with Aloha Cargo and with Superferry officials to provide the most affordable shipping rates.

Love's ships about 36,000 pounds of bread products daily to the Neighbor Islands, which represents about 38 percent to 40 percent of the company's business.

Walters said that Love's Japan-based owners approached him in May about buying the business.

During a meeting last month at the Dole Cannery, employees were told that a purchase was pending and buyers would retain all workers.

Besides Walters, the buyers include Byron Chong, vice president and director of sales and marketing; Alan Yamada, director of administration; and Jean Hagi, director of human resources.

Walters said that over the long-term, Love's may set up an Employee Stock Ownership Plan, which would own a portion of the bakery.

Love's said Warren Luke, chief executive officer of Hawaii National Bank, along with the ILWU Local 142, U.S. Sen. Daniel Inouye, and others played a role in supporting the purchase by local managers.

"This is all about the employees," Walters said.

"Without them, no acquisition would work."