Twinkies will likely live on post-bankruptcy
Hostess Twinkies on display at a grocery store in Santa Clara, Calif., Wednesday, Jan. 11, 2012. / AP Photo/Paul Sakuma
DETROIT Twinkie lovers, relax.
The tasty cream-filled golden spongecakes are likely to survive, even though their maker will be sold in bankruptcy court.
Hostess Brands Inc., baker of Wonder Bread as well as Twinkies, Ding Dongs and Ho Ho's, will be in a New York bankruptcy courtroom Monday to start the process of selling itself.
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The company, weighed down by debt, management turmoil, rising labor costs and the changing tastes of America, decided on Friday that it no longer could make it through a conventional Chapter 11 bankruptcy restructuring. Instead, it's asking the court for permission to sell assets and go out of business.
But with high brand recognition and $2.5 billion in revenue per year, other companies are interested in bidding for at least pieces of Hostess. Twinkies alone have brought in $68 million in revenue so far this year, which would look good to another snack-maker.
"There's a huge amount of goodwill with the commercial brand name," said John Pottow, a University of Michigan Law School professor who specializes in bankruptcy. "It's quite conceivable that they can sell the name and recipe for Twinkies to a company that wants to make them."
Hostess has said it's received inquiries about buying parts of the company. But spokesman Lance Ignon would not comment on analysts' reports that Thomasville, Ga.-based Flowers Foods Inc. and private equity food investment firm Metropoulos & Co. are likely suitors. Metropoulos owns Pabst Brewing Co., while Flowers Foods makes Nature's Own bread, Tastykake treats and other baked goods. Messages were left for spokesmen for both companies on Sunday.
"We think there's a lot of value in the brands, and we'll certainly be trying to maximize value, both of the brands and the physical assets," Ignon said Sunday. He said it's possible some of Hostess' bakeries will never return to operation because the industry has too much bakery capacity.
R.I.P. Hostess
Twinkies maker Hostess to close
Little will be decided at Monday afternoon's hearing before Bankruptcy Judge Robert Drain, Pottow said. The judge eventually will appoint a company that specializes in liquidation to sell the assets, and the sale probably will take six months to a year to complete, Pottow said.
Irving, Texas-based Hostess filed for Chapter 11 bankruptcy protection in January for the second time in less than a decade. Its predecessor company, Interstate Bakeries, sought bankruptcy protection in 2004 and changed its name to Hostess after emerging in 2009.
The company said it was saddled with costs related to its unionized workforce. The company had been contributing $100 million a year in pension costs for workers; the new contract offer would've slashed that to $25 million a year, in addition to wage cuts and a 17 percent reduction in health benefits.
Management missteps were another problem. Hostess came under fire this spring after it was revealed that nearly a dozen executives received pay hikes of up to 80 percent last year even as the company was struggling.
Then last week thousands of members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike after rejecting the company's latest contract offer. The bakers union represents about 30 percent of the company's workforce.
By that time, the company had reached a contract agreement with its largest union, the International Brotherhood of Teamsters, which this week urged the bakery union to hold a secret ballot on whether to continue striking. Although many bakery workers decided to cross picket lines this week, Hostess said it wasn't enough to keep operations at normal levels.
The company filed a motion to liquidate Friday. The shuttering means the loss of about 18,500 jobs. Hostess said employees at its 33 factories were sent home and operations suspended. Its roughly 500 bakery outlet stores will stay open for several days to sell remaining products.
News of the decision caused a run on Hostess snacks at many stores around the country, and the snacks started appearing on the Internet at inflated prices.
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If Grupa Bimbo is the successful bidder, a large percentage of the product will be made in Mexico. For more northen regions, they will likely move the equipment to a more business friendly area. The BCTWGMI union says the product will be made by their members - not likely. They may try to organize the new sites, but who in their right mind would join a union that just threw away 6000 members.
And has anyone bothered look at the union president behind this? Frank Hurt makes $262,000.00 per year and his top 10 executives all make over $150k. None of them have ever taken a pay cut and they all get to keep their jobs. At least Hurt got to make his point. In the old days, the Teamsters would be planting him next to Hoffa.
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Free Markets? Is that what you call this? How about the freedom of the citizens that own the company? How about the freedom of others to work for a company without having to belong to a union to work for living?
Forcing individuals to work for a union is not freedom.
Forcing a company into bankrupcy is not freedom.
Why couldn't the company have the freedom to hire able body individuals to work for what ever pay they are willing to work for?
Next they'll steal the pension money, sell the assets (like the recipes and trademarks) and keep all of that, too.
Hostess wasn't killed by greedy workers.
It was Bained.
I actually threw that box of Twinkies away and never bought them again. IMO, they deserve the problems they brought upon themselves, serving inferior products.
I just hope somebody saved the original recipe for Twinkies.
Even for sweet useless products, the Hostess line has not had a new idea for at least 30 years.
It's on the shelves. We don'thide them from the kids.....they just look for other types of treats.