Could Bimbo Save the Twinkie?

Mexican company Grupo Bimbo may be the key to saving the Twinkie from its untimely death.

Earlier this month, 6,600 Hostess employees went on strike. The Bakery, Confectionery, Tobacco Workers and Grain Miller’s International Union (BCTGM), which represents the employees, took the strike action after the latest contract proposal from Hostess Brands was rejected by 92 percent of its members.

On November 16, 2012, Hostess announced that it was ceasing plant operations and laying off most of its 18,500 employees. It stated that it intended to sell off all of its assets, including the well known brand names, and liquidate. The CEO, Gregory Rayburn, stated, “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

That same day, a press release was issued by BCTGM stated in part, “When a highly-respected financial consultant, hired by Hostess, determined earlier this year that the company’s business plan to exit bankruptcy was guaranteed to fail because it left the company with unsustainable debt levels, our members knew that the massive wage and benefit concessions the company was demanding would go straight to Wall Street investors and not back into the company.

In order to actually liquidate, Hostess needs the permission of U.S. Bankruptcy Court Judge Robert Drain. According to CEO Gregory Rayburn, several potential buyers have expressed interest in acquiring the Hostess brand, including Grupo Bimbo.

When Hostess filed for bankruptcy back in 2007, Bimbo tossed their bid into the ring to seize the company. In the end, Bimbo backed out, but some have speculated they may step in this time.

Hostess had been struggling with high sugar prices in the U.S., while Bimbo has access to cheaper Mexican sugar. However, despite access to less expensive sugar, Bimbo would be taking production and manufacturing jobs out of the U.S.

Bimbo may not have the opportunity to step, however, because on Monday, the U.S. Bankruptcy Court in White Plains NY ruled that a liquidation would not be allowed and that Hostess Brands would enter mediation with the worker’s union to avoid a shutdown.

Published in Notitas de Noticias