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 1:49PM
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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!

Dec 14, 2012 1:48PM
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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.

Dec 14, 2012 1:45PM
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Just goes to show the real worth of unions nowadays.  18,000 people out of a job, just because some suit behind a desk told them they weren't making enough money.  Now they are on unemployment.  How much sense does that make?  Been there, done that, gave my union card back years ago.
Dec 14, 2012 1:44PM
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SITTING AROUND ALL DAY PLAYING WITH I PADS AND IPODS OR WHATEVER ARE WHY THESE LAZY KIDS ARE OBESE PERIOD WE DRANK KOOLAID WITH ALL THE SUGER WITH BALONY SANDWICHES AND THE PLAYED OUTSIDE TILL IT WAS PITCH DARK......
Dec 14, 2012 1:41PM
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i dont care if twinkies ever come back ... i want my merita bread back ..  all other bread stinks ..
Dec 14, 2012 1:35PM
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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. 

Dec 14, 2012 1:30PM
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They have a built-in customer base have you seen their customers- Unions will go bonkers
Dec 14, 2012 1:16PM
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Time goes on. Seen many changes in 60 years. Get used to it!
Dec 14, 2012 1:15PM
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I did not know Hostess Brands kept 'planets' as assets.
Dec 14, 2012 1:10PM
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Obviously, top executives control the outcome of a company. Then why is the bankruptcy court allowing the top executives to get 1.8 million dollars in bonuses? Do employees get bonuses when the company goes bankrupt? If I owned a business and I ran it in the ground, i surely would not be expecting to get a bonus for "NOT" doing my job. 
Dec 14, 2012 1:09PM
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If Wal-Mart gets it, Twinkies will be made in China.
Dec 14, 2012 1:08PM
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Didn't like the Hostess cupcakes and will not buy them in the future if they come back on shelf.They are dry,tasteless,expensive,smaller then the original cupcakes,and very,very,very little cream filling.So who cares if they ever come back.I'll buy Little Debbie cakes and Nickles brand.
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