Wal-Mart wants to save the Twinkie

The retailing giant is one of several bidders reportedly interested in purchasing parts of Hostess Brands.

By Jonathan Berr Dec 14, 2012 11:17AM
Wal-Mart store in Secaucus, New Jersey / Jin Lee/Bloomberg via Getty ImagesWould a Twinkie taste just as good if Wal-Mart (WMT) made it?

According to Bloomberg News, the largest retailer is making a run for the assets of Hostess Brands, the bankrupt maker of Twinkies, Sno-Balls and Wonder Bread. Other bidders include grocery chain Kroger Co. (KR) and Grupo Bimbo, the Mexican conglomerate whose brands include Entenmanns's baked goods and Thomas' English muffins. Some of the bids are for all the company's assets and others are for lines of business and individual products, the news service said.

The interest is a sign that Hostess, which has begun to liquidate its assets after unionized workers balked at agreeing to additional concessions, will live to fight another day in some form or another.

The 18,000 Hostess employees who lost their job shouldn't rejoice quite yet. Any new owner of Hostess or its businesses will not be bound by any agreements that prior management made with the unions. A new buyer may demand wage concessions as steep, if not steeper, than the ones demanded by the current owners. Sadly, the $1.8 million that the bankruptcy court approved as retention bonuses for top executives will be paid no matter what.

Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union say they are not to blame for the company's demise. Its website argues that its members dedicated their working lives to their work and had to "watch helplessly as the company was run into the ground, over and over again." Ironically, I attended a conference on corporate restructuring a few years ago where Hostess was touted as a success story. 

Even if Hostess had the best labor relations in the world, the company would face a tough road ahead. For one thing, the costs for ingredients have skyrocketed  this year as U.S. crops withered following the worst drought in more than five decades. America's dietary habits have also changed in the wake of soaring rates of obesity.

Take Twinkies. When I grew up in the 1970s and 80s, parents would think nothing of putting the creme-filled spongecake in a kid's school lunch. Today's parents would think twice before letting their children eat something so unhealthy.

Hostess products such as Twinkies are like newspapers. People like them in theory, but can't remember the last time they bought one. That needs to change if Hostess hopes to survive.

--Jonathan Berr does not own shares of the listed stocks.  Follow him on Twitter @jdberr

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414Comments
Dec 14, 2012 2:32PM
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Time for the Tasty Baking Company out of Philly to get back on their feet and begin selling their products on a national level. One good company who makes great snack cakes.
Dec 14, 2012 2:29PM
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I't like the movie, (It's a wonderful life) ... "Mr. Potter isn't selling.... He's buying!"   Goliath will someday fall.
Dec 14, 2012 2:28PM
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So if Walmart buys it then they will move the jobs to  Arkansas.  a right to work state,
Dec 14, 2012 2:26PM
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The "Journalist" writes: Take Twinkies. When I grew up in the 1970s and 80s, parents would think nothing of putting the creme-filled spongecake in a kid's school lunch. Today's parents would think twice before letting their children eat something so unhealthy.
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It only proves, that we live in a baby poop world of weak, sniveling brats, Grantland Rice.  That's really all it proves.  
You may as well snarf a Twinkie.  No one gets out of here, alive.
Dec 14, 2012 2:24PM
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Bring em back & bring back Chocodiles too, while you're at it. An occassional Twinkie never hurt anybody. They had the best raisin bread too.
Dec 14, 2012 2:23PM
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If you don't make Union Wage's you can't afford Hostess products anyway. So they're just shooting themselves in the foot.
Dec 14, 2012 2:19PM
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The executives got bonuses in order to retain them to help with the selling off of assets, and other things that have to be done under bankruptcy.  Otherwise, these execs would go get other jobs, and the the creditors would have to hire others to oversee the selling off of the company, and it would probably cost them MORE than $1.8 million to do it.

 

It is a simple and rational financial decision made by the creditors and the judge and has nothing to do with greed on Wall Street, or "evil, rich" executives.  It may seem unfair from the hourly workers point of view, but it's the best thing to do from a business sense.

Dec 14, 2012 2:18PM
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Yeah,Wal-Mart will be making Twinkies in China,with child labor!
Dec 14, 2012 2:14PM
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Unions make companies honest, period. Why else would the top executives want to get rid of unions. Most of our big coporate execs do nothing but watch the peon workers rake in the money for them. If the execs can't have their way, they just shut the company down and go to the next company to line their pockets or create the so called "right to work state" with minimum wages. Do you see the big execs give up anything? 
Dec 14, 2012 2:13PM
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Don't blame unhealthy eating on the twinkie ! if your unhealthy it's YOUR fault NOT someone else. If I feel like a sno-ball or a twinkie I will have one or two and if I get fat thats my fault not hostess. It' time people quit blaming others for their habits. It is your TOTAL eating habits not just the twinkie, grow up america and accept the truth I love my twinkie & sno-ball and we want them to continue.
Dec 14, 2012 2:10PM
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Wal-Mart and Twinkies - what a great fit!  Think about it.  The people who consume the most Twinkies are probably Wal-Mart customers.  One stop shopping!

 

But I also agree wholeheartedly with Michael DeSantis. You made me nostalgic for the days of Kool-Aid, baloney sandwiches and playing outside with all the kids on the block until dark.  Great times and memories!!  And yes, we were skinny, healthy kids who went right to sleep because we were pooped!

Dec 14, 2012 2:09PM
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The bean counters caused it to fail. Now they can be the first union company to work for Walmart
Dec 14, 2012 2:08PM
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" Today's parents would think twice before letting their children eat something so unhealthy."

 

that statement totally explains the childhood obesity problem.  Great reporting job, msn.

Dec 14, 2012 2:03PM
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First off....why is the writer of this article so sad that executives got a million dollar bonus?  I say good for them.  Kudos.    The unions are to blame.  Period.   They could have accept a wage decrease but they refused.   All 18,000 workers would have jobs currently.  Now they have nothing.  And I sincerely hope that all 18,000 workers who put their trust, dedication, and lives into the hands of the unions, all end up homeless and destitute.    Sleeping dogs lie together.   

I would have rather had any job instead of no job.....shame on them and the unions for turning their backs on the mouth that fed them.   
Dec 14, 2012 2:03PM
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Companies go out of business all the time.  I don't thing the unions were the main cause but they didn't help.  The current obsession with living healthy is more to blame.  The company was doomed anyway.  Disposable income is going to drop as the US economy gets worse due to the dept problem.  That would kill the brand anyway.
Dec 14, 2012 2:01PM
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Twinkies tasted pretty good 30 years ago. If they want to bring back those twinkies fine if not why bother?
Dec 14, 2012 2:00PM
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Wal-Mart would slowly change the ingredients to the cheapest crap on earth. Plus they would probably make them just south of the mexican border. Everything Wal-Mart touches they ruin in the pursuit of higher profits.
Dec 14, 2012 1:57PM
Dec 14, 2012 1:54PM
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I'm more than a little disgusted that the court allowed $1,800,000 to be paid to the executives for bonuses.  The company went under, in what world are they owed bonuses?
Dec 14, 2012 1:51PM
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1.8 million in bonuses make it attractive for a corporation and other corporations to go bankrupt. In fact the short time line that the judge ordered Hostess to adhere to in negotiations with the Unions was a joke as well.If the average working man goes into bankruptcy a chapter 7 liquidation all his assets must be sold to reduce his debt and then the unpaid balance is waived. Why shouldnt a corporation live up to the same test. Lets be real here you can have millions of dollars in personal assets and go bk on your corporation, which is cool with me this is a free country, but allowing a corporation to pay out money of that magnitude when they are behind in their retirements funding accounts ect. is criminal. 
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