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Twinkies will live on, the bidding battle has begun

The nation mourned the loss of Twinkies as a battle between Hostess and labor unions led to the company shutting down operations, but as we forecast, a bidding war will keep the sweets alive.



Twinkies: let the bidding battle begin

When Hostess Brands filed for bankruptcy earlier this year, then filed for liquidation last month, the internet exploded with rage over potentially being without Twinkies and Ho Hos, and other beloved brands, and at the time, we forecast, “It is not likely that their most popular items such as Twinkies, Wonder Bread, Ding Dong, Ho Ho’s, Dolly Madison, and Hostess CupCakes will be gone forever, as the brands will be sold off to new owners.”

Enter the roughly 24 bidders for the brands, according to Bloomberg News. The process is done confidentially, so we cannot confirm directly, but Bloomberg says Walmart, Kroger, Alpha Baking Co., and Grupo Bimbo SAB are included in the bidding process.

Some bidders will go for all Hostess Brands, while others will likely bid on specific divisions individually, like the bread division on its own, and cake on its own. Bloomberg asserts that the total sale could be around $1 billion.

How Hostess Brands’ ship sank

Last month, unable to reach a deal with a baker’s union representing over a quarter of all its employees, Hostess Brands, which includes the Twinkie and Wonder Bread products, filed for liqudation with a bankruptcy court, after the brand filed for bankruptcy in January, but in months following, saw strikes by unions, and while they came to an agreement with the teamsters, the Bakery, Confectionery, Tobacco Workers and Grain Millers Union (BCTGM) continued to strike, and no deal was reached. Hostess permanently stopped production lines under their name brand at all 36 plants, and 18,500 employees will lose their jobs.

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The deal rejected by the baker’s union as part of the Hostess Brand bankruptcy was an 8.0 percent pay cut in the first year, a 3.0 percent increase in the second year, and a 1.0 percent increase in the third year, leading to an overall decrease of 4.0 percent in take home pay. Although roughly 13,000 of the 18,500 employees were not on strike, their jobs were cut, and there is no guarantee they will be hired back by whomever wins the bid for the brand.

Unions, management, and what’s next

Some pointed the small union as the villain, refusing to compromise, even after most employees had come to an agreement with the major brand, while others point the finger squarely at the company which they say had been mismanaged for years, with rumors of $1.8 million in executive bonuses pending approval from the bankruptcy court as their ship was sinking. Regardless of what has happened in the past, Hostess Brand will be no more, but their Twinkies, Ding Dongs, Wonder Bread, and the like will live on, perhaps as a single company, but likely being split up among the highest bidders.

Written By

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

1 Comment

1 Comment

  1. Roland Estrada

    January 2, 2013 at 1:10 pm

    Hopefully with non-union American jobs.

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