Wal-Mart wants to save the Twinkie
The retailing giant is one of several bidders reportedly interested in purchasing parts of Hostess Brands.
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
Twinkies don't make kids fat....I grew up in the 60's, 70's, and early 80's and kids were not fat like they are today. One thing I would do is get rid of the scooters in supermarkets (elderly and truely handicapped on get to use them) and food stamps would not buy twinkies, soda, ribeyes and we go back to commodities.
You can feed 4 times the folks with the commodities my blind aunt used to recieve ie. peanut butter, cheese, rice, beans, powdered milk, etc. You want soda, twinkies, steak, there's and app for that.....and it WORKS!
Top executives usually get big bucks for not doing what they need to do. Isn't that the American way as we know it today. They get more the people doing the job get less and less as do the rest of the consumers.
Maybe they need to take the 1.8 million, fire the executives and pay the people who have extended them credit. DUH!!! think that would make any sense at all? I think as much as what they are doing.
Supply and demand, period. If Hostess is done, someone else will pick up their end of the market share. If it takes 18,000 more workers to make enough cakes to feed the American appetite, then some other cake maker will add 18,000 jobs.
It is far from the end of the world. 18,000 Hostess employees decided that their job wasnt worth the pay. Somewhere, a bunch of folks will be celebrating new jobs making whatever Hostess decided not to make.
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