Hostess sweets have tempted the sugar-starved among us for more than eight decades. Now, the company is going out of business. That moves the focus on Hostess’ brands—Twinkies, Devil Dogs, Wonder Bread, Ho Ho’s, to name a few—from the store shelf to the auction block.

It seems quite plausible that the next Twinkie maker could be a Mexican company run by a billionaire family.


Parting Such Sweet Sorrow: Twinkie Maker Hostess To Liquidate, Layoff 18.5K Workers
Abram Brown
Forbes Staff

Finding Mexico's Missing Billionaires
Kerry A. Dolan
Forbes Staff

Snapshot: Daniel Servitje Montull & family
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#310 Billionaires
Meet Daniel Servitje Montull. He and his family are worth more than $4 billion by our tally. Servitje runs Grupo Bimbo, a publicly traded bakery concern that ranks as the world’s largest bread maker. (Seated close to Servitje is his uncle, Don Roberto, and his father, Lorenzo. Papa Servitje founded Bimbo with three others in 1954.) Daniel Servitje assumed control of Bimbo in 1997, setting the company on a course of rapid growth. This included a battle with Mexico‘s tortilla don; positioning white bread in Latin American markets; and careful management of Bimbo’s fleet of white delivery vans.

A period of substantial expansion—profits doubled and revenue more than tripled—that also included several flirtations with buying Hostess.

Acquisitions are at the very center of Bimbo. Indeed, Bimbo has gobbled up companies, and this was initially confined to South America. Servitje, a thin man with deeply set eyes, worked to extend Bimbo’s reach from Mexico to the tip of South America, in Patagonia. Thereafter, his attention turned north. He bought Mrs. Baird’s Bakeries of Fort Worth, Texas for $200 million shortly before 2000, then Heiner’s and Earth Grains. And just last year, Bimbo bought the U.S. bakery business of Sara Lee Co. for $709 million, as well as the Spanish and Portugal portions in a separate transaction.

Today, Bimbo is a $10 billion sales business with $200 million in cash on its balance sheet. By contrast, Bimbo posted $3 billion in sales a decade ago; annual profits have more than doubled to roughly $400 million. It competes with U.S. companies like Kellogg, Hershey and General Mills, and with privately held operations such as McKee Foods, the maker of Little Debbie’s snacks. (Other Hostess suitors include Flowers Food, the company behind Nature Valley granola, according to SunTrust.) Supermarkets stock Bimbo staples like Entenmann’s and Thomas’ English muffins. And, significantly, the Sara Lee acquisition suggests that Bimbo’s appetite for U.S. bakeries is hardly satiated.

So, perhaps Twinkies will take their place in Bimbo’s white vans. (A FORBES email to a Grupo Bimbo spokesman was not immediately returned.) Bimbo tried once before to seize Hostess. It teamed up with a Hostess union and an U.S. investment firm, billionaire Ron Burkle’s Yucaipa, to form a competing bid during Hostess’ first trip through bankruptcy in 2007. That eventually fell apart. Bimbo backed out, and Yucaipa went ahead and entered a fruitless offer, valuing Hostess at $580 million. Hostess’ business has gone staler since, the product of unfunded legacy pensions, leverage and labor strikes.

But even before 2007, Bimbo seemed sweet on Hostess. In the early 2000s, analysts widely speculated that Bimbo thought Hostess a key ingredient for North American expansion with delivery routes that penetrated across the country into convenience stores, gas stations and grocery markets. Bimbo publicly stated that it was shopping in 2000, and analysts widely speculated that Interstate Bakeries—the Hostess parent then facing three straight years of losses—would fall to Bimbo.

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Mike F
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thanks for posting this...It has caused me to read more.

A

If that is so and I was one of the 18,000 I'd be wanting some serious union dues returned! Nice of the union to sacrifice 18,000 of its members with no real benefit for the other members at other companies. If anything, the union's position has been severely weakened by losing this game of chicken.

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Leave it up to the FleBay hawks...

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I think the issue here is that WITH those concessions are those jobs really with saving? From what I've read it would kick most of them below what they get in unemployment now so where is the incentive NOT to close their doors?

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And that's exactly the point. The company was making millions so they decided to turned on their employees by cutting their pay.
Then they wanted to cut their pay some more and then wanted to make them pay for their own health insurance. Once again greed personified.

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"What you hear in a great jazz band is the sound of democracy. “The jazz band works best when participation is shaped by intelligent communication.”
Harmony happens whenever different parts get to form a whole by means of congruity, concord, symetry, consistency, conformity, correspondence, agreement, accord, unity, consonance…….

I don't think the Hostess Corporation was not without fault in the direction the company went but I'm sure the union demands were part of the problem. I would think it is not unlike the auto workers union. (Note: I am in a union so I'm not inherently anti-union.) I would bet that the union representing the Hostess workers did not necessarily have those worker's best interest in mind. Those unions can be as bad as the corporation itself.

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Hostess Exited Bankruptcy Because Of "Substantial Concessions By The Two Big Unions." Forbes explained that Hostess was able to exit bankruptcy in 2009 for three reasons, including that "substantial concessions" were made "by the two big unions" -- the Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. Forbes further explained that "annual labor cost savings to the company were about $110 million" and that "thousands of union members lost their jobs." [Forbes, 7/26/12]

Hostess Had Stopped Contributing To Pensions And Wanted To Cut Worker Pay Further. According to The Kansas City Star, union leaders reported that Hostess had stopped contributing to workers' pensions and wanted to cut wages and benefits "by 27 to 32 percent":

I hate to say it but it seems that the facts are Hostess was a greedy company that didn't care about their employees and their behavior clearly demonstrated it. As far as the employees
losing their jobs? It apparent that in the end of the day they didn't have much of a job or a future at hostess.

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"What you hear in a great jazz band is the sound of democracy. “The jazz band works best when participation is shaped by intelligent communication.”
Harmony happens whenever different parts get to form a whole by means of congruity, concord, symetry, consistency, conformity, correspondence, agreement, accord, unity, consonance…….

Interesting. Owners and a few employees are trying to hash
it out. A judge has asked for negotiations...

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Mike F
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