Growing up, the best part of school lunch was "The Trade." How
much could you get for your chips? Would you trade your chocolate milk for
some Ho-Hos?
At lunch tables all across the nation, this was the real exchange floor...
the place where all kids became ruthless pit masters holding out for Sara Lee
or Doritos, and bag-lunch gold – Hostess Twinkies.
Well, now that bag-lunch gold could become very rare
indeed...
From the Associated Press:
Hostess, the maker of Twinkies and Wonder Bread, plans to go out of
business, lay off its 18,500 workers and sell its snack cake and bread
brands.
The Irving, Texas, company said a nationwide strike crippled its
ability to make and deliver its products, which also include Ding Dongs, Ho
Ho's and Home Pride bread.
Hostess suspended bakery operations at all its factories and said its
stores will remain open for several days to sell already-baked products.
No doubt this news will come as a shock to some of you... We all thought
Twinkies were indestructible. They don't mold, or catch fire, and can't be
electrocuted as some of these experiments have shown.
(Warning: Don't let your kids try these at home... you could end up with a
house full of thick, foul smoke.)
The immortal Twinkies maker has filed for bankruptcy.
Twice, actually, in the past decade. This time around, a nationwide strike
has forced Hostess to fire more than 18,000 workers and close its doors.
"The Bakery, Confectionery, Tobacco Workers and Grain Millers
International Union went on strike Nov. 9," reports Bloomberg,
"after a bankruptcy judge in White Plains, New York, imposed contract
concessions that 92 percent of the union's workers rejected."
Three of Hostess' 36 plants were closed permanently on Monday.
Its major brands will be sold off, and some will drift off into oblivion.
Twinkies could be saved, if someone wants to buy it.
Hostess CEO Gregory Rayburn told CNBC, "I'm certainly hopeful that we
can sell the brands and the brands will live on. They're iconic."
But for now, Hostess is canceling orders in process, and any products on
the road are going to have to turn around and head back to the shippers. That
means school lunch tables around the nation are going to face a Twinkies
shortage.
Hostess has revenues of about $2 billion, but sales of these sweet cakes
have been falling. That doesn't mean the brands aren't valuable.
One Philadelphia-based analyst, Joseph N. DiStefano, a member of Bloomberg
LP's New York Finance Team, says three companies with plants in the area
could target some Hostess brands:
• Horsham-based, Mexican-owned Bimbo Bakeries USA, owner of Arnold's,
Thomas' English Muffins, Stroehmann's, Entenmann's and dozens more brands --
though Bimbo is already so big another acquisition could face antitrust
protests.
• Georgia-based Flowers Foods, which owns Tastykake and is expanding
production of its Nature's Own bread lines at its Oxford, Chester County
bakery.
• J&J Snack Foods, the Pennsauken-based owner of dozens of frozen,
cafeteria and packaged snacks lines, and a major supplier to Wawa and other
retailers.
All three are up over the past year, and this is their performance over the past five years:
View larger chart
Of the two U.S. exchange-based companies, Flowers Foods:(FLO:NYSE) has more cash to play around
with... and it has less debt compared to its equity.
This liquidation is going to be a long process, but Hostess is looking to
make it go as quickly as possible, and will be selling its brands to the
highest bidder.
We'll just have to wait and see who that is, and if the Twinkies brand is going to live on.
A Disturbing Secret Obama Isn't Telling You...
Congress is hiding a dark secret that could soon devastate millions of
retirement-seeking Americans...
One leading financial magazine refers to this event as "a time
bomb."
In short, if your money is connected in ANY way to the stock market, I
urge you to watch this eye-opening presentation.
Simply click here right now to view
it for FREE.
