From Ho Hos to Bimbos: Enjoying My Last Twinkie

The Obama economy would make Sandra Fluke proud. Declining sales and increasing union costs have been driving up the price of Hostess products. The price reached the breaking point and now it looks like our beloved all-American Ho Hos could be sold off to Mexico's Grupo Bimbo.

HotAir reported on Hostess:

“I think we’ll find buyers,”  CEO Gregory F. Rayburn told ABC News on Sunday.  ”A few have surfaced already since Friday expressing interest in the brand to acquire them.”

Con Agra and Flowers Foods are among the companies that have expressed interest in Hostess, but Mexican company El Grupo Bimbo may have an edge, the Christian Science Monitor reported Saturday.  Grupo Bimbo, headed by Mexican billionaire Daniel Servitje Montull, is the largest bread-baking company in the world.

The Daily Herald added:

Economists say part of the reason Hostess struggled was due to high sugar tariffs meant to protect local producers, the Monitor reported.  Grupo Bimbo could take advantage of lower sugar prices in Mexico.

David Margulies, a spokesman for Bimbo Bakeries USA, didn’t respond to an e-mail seeking comment on that company’s potential interest in Hostess assets. Bimbo, based in Horsham, Pennsylvania, is the U.S. division of Mexico’s Grupo Bimbo SAB, the maker of Entenmann’s cakes and Thomas’ English muffins.

Even before the strike, Hostess endured years of declining sales as Americans turned to rivals’ snacks and breads, while ingredient costs and labor expenses climbed.

Tim Ramey, an analyst for D.A. Davidson & Co., said he expects Twinkies and other Hostess brands to disappear from the marketplace. Any buyer would need a distribution system to get the products into stores, he said.

“Without your own distribution, it’s pretty problematic,” Ramey said yesterday in an interview. “Twinkies has been on a slow death spiral for a long time. Somebody might decide they want something to do with it, but it’s not likely.”

As your intrepid blogger, I took it upon myself to go buy some of the last Wonder Bread. I found that two loafs of bread cost $9.18. That seems a high price for bread.

As we reported earlier today, the Obama Recession has been hard on Hostess to the point that some people are wondering where is the Hostess bailout? Liquidation is being portrayed by the bankruptcy judge as the 18,000 workers "last chance."  The Hostess CEO believes that buyers will pick up portions of the business in a liquidation, but the Bimbo bailout does not look realistic.

Bloomberg quotes Hostess CEO Gregory Rayburn as stating the Bimbo deal is a "misconception":

“One misconception in the market is that Bimbo would be a buyer and bakery leadership told us in several plants that Bimbo would come in and buy, which is absurd,” Rayburn said today in an interview with Bloomberg Television.

Rayburn cited Bimbo’s agreement with the U.S. Justice Department to sell some Sara Lee brands in order to complete its acquisition of Sara Lee’s North American bakery business.

“Due to antitrust, it would never happen,” Rayburn said.

We also reported that the bankruptcy judge urged Hostess and the bakery union to meet for mediation. Unfortunately, that solution does not look promising:

After Hostess’s unions had agreed to more than $100 million in annual cost concessions during Hostess’s previous bankruptcy, the bakery union thought it made little sense to agree to further cuts. It feared a deal would pull down wages and benefits throughout the industry, without saving Hostess.

Well, it looks like Hostess will disappear forever. We might as well enjoy the last of our Obama Zombie Apocalypse Twinkies Stash for Thanksgiving.

We should be thankful. We weren't left for dead in Benghazi to cover-up the President's sale of weapons to Al Qaeda.