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

More from Money Now



414Comments
Dec 14, 2012 1:44PM
avatar
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 1:45PM
avatar
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 1:49PM
avatar

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 2:10PM
avatar

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 2:13PM
avatar
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 1:54PM
avatar
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 1:35PM
avatar

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 1:10PM
avatar
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
avatar
If Wal-Mart gets it, Twinkies will be made in China.
Dec 14, 2012 2:00PM
avatar
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 1:51PM
avatar
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. 
Dec 14, 2012 2:01PM
avatar
Twinkies tasted pretty good 30 years ago. If they want to bring back those twinkies fine if not why bother?
Dec 14, 2012 2:26PM
avatar
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.
---
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 1:16PM
avatar
Time goes on. Seen many changes in 60 years. Get used to it!
Dec 14, 2012 1:48PM
avatar

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 2:34PM
avatar
Best guess, whoever buys Hostess, they will be produced in a far more mechanized plant just south of the border because the main market is closer.

As to why the bonuses during bankruptcy, that is decided by the owners representatives which are the board of directors and stockholders which include the CEO and of course the bankruptcy judge................ the unions had gotten their pay and bonuses according to a CONTRACT which was forced on ownership ... and then wanted more ........... they got their just deserts, now a good reason to reorganize with far less labor and more machines .......... machines are always better than the usual unskilled labor, no sick days, no hangovers, no maternity /paternity leave, no bad attitudes, no unions, no vacations, no HR dept, no suits, no workman's comp, no healthcare, less bookkeeping and payroll dept .... and on and on.

The real tearjerker is that unskilled humans haven't faced the fact that they are infinitely replaceable, and that stupidity is WHY they are replaceable!
Dec 14, 2012 3:09PM
avatar
All because a bunch of bakery union morons could not grasp the basic concept that if you don't like your job and are not happy with the wage being offered then you have three options.  1.  Quit and go find another job that does pay what you're happy with or offers the type of work your looking for.  2. IF your not qualified to make that wage or want a better job then go back to school to earn a degree so you can have a chance at making more and obtaining that job.  3.  Start your own business and then you can decide on what you're willing to pay.   Don't however put others at risk for losing their jobs because you as part of a dimwit union decide that it's not fair that you make a hourly wage while others higher up in the company make lots more.  A lot of dimwit libs think people own them a living and have the give me this and give me that attitude.  There is a reason a person starts a business, it's to make money and clearly not everybody is going to get paid the same when you run the company.  If you don't like it, QUIT and go find something else but don't whine about it and risk everybody else their chance to work at a company because you don't make what a C.E.O does because your on a line baking a Twinkie. 
Dec 14, 2012 1:30PM
avatar
They have a built-in customer base have you seen their customers- Unions will go bonkers
Dec 14, 2012 3:22PM
avatar

My son was in regional distribution for Hostess.  He acknowledged the mistakes made by management but his job was not made miserable by the decisions of the people upstairs.  When he could not get his union people to do their jobs and not be able to do anything about it, his service to his customers suffered and he began losing outlets for Hostess products.  This affected sales and the profitability of the company.

When did it become a crime in this country to get educated, trained and succeed as management, climb the ladder due to your abilities get paid for these abilities?  All you hear about are the union workers that lost their jobs but there are many management people that lost their jobs, also.  Unions did their memebership well when they viewed the members working with management creating success for all.  When they lost sight of the synergy necessary between workers and management working together for success and created an "us against them" mentality, everyone loses.

Dec 14, 2012 2:18PM
avatar
Yeah,Wal-Mart will be making Twinkies in China,with child labor!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?

MARKET UPDATE

[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More

MSN MONEY'S