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
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.
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!
" 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.
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