Hostess Brands Inc., the latest incarnation of a 82-year-old company that gave generations of Americans the ever-fresh Twinkie cakes will immediately fire about 15,000 workers after a last-ditch mediation with its second-largest union collapsed Wednesday. It will also actively respond to offers to buy the rights to make its sugary treats.
The financially struggling company, employing about 18,000 workers, recently obtained wage and pension concessions from the largest of its unions, the International Brotherhood of Teamsters, but was unable to get similar concessions from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.
U.S. Bankruptcy Judge Robert D. Drain summoned both parties to a mediation session Tuesday, but the 11-hour effort failed. On Wednesday, Hostess asked for and received permission to begin liquidation, a process that begins with the dismissal of about 15,000 workers.
Teamster leaders publicly criticized the bakers' union, which had been on strike since Nov. 9.
The Irving, Texas-based company announced it will close 33 bakeries, 565 distribution centers, and 570 bakery-outlet stores, while terminating about 5,500 delivery routes.
Hostess makes Wonder Bread, Ho Hos, and Ding Dongs, among baked goods, but its four-inch, cream-filled Twinkie has been its signature product.
In Wednesday's hearing before Drain, Hostess argued for a swift closure of operations so employees could begin applying for unemployment and buyers could be found for its assets, including the Twinkie, according to the New York Times.
"From this point forward, I need two things to happen," CEO Gregory Rayburn told the judge. "I need to maximize the value of the estate, and I need to do the best thing for the employees."
An investment banker with Perella Weinberg Partners said his firm is contacting about 145 financial firms to gauge their interest in buying Hostess Brands assets, the New York Times said. The banker, Joshua S. Scherer, said he had already received six takeover bids, although they were all inadequate.
Potential buyers include regional bakeries, private-equity firms, liquidators, and national retail chains comparable with Wal-Mart Stores Inc. (NYSE: WMT) and the Kroger Co. (NYSE: KR), Scherer said.
Mike Obel works as Senior Editor, Copy Chief. Before that he was Markets Editor, assigning, editing and writing about business, markets, finance and economics. Before coming...