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Hostess Fails to Reach Union Deal, May Shut Down

By Antonio Perez
Epoch Times Staff
Created: November 21, 2012 Last Updated: November 21, 2012
Related articles: Business » Companies
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Hostess Brands Twinkies cakes are shown in Miami, Fla., Nov. 16. Hostess Brands Inc. will continue to seek a liquidation after court-ordered mediation with the union Nov. 20 failed to reach a deal. (Joe Raedle/Getty Images)

Hostess Brands Twinkies cakes are shown in Miami, Fla., Nov. 16. Hostess Brands Inc. will continue to seek a liquidation after court-ordered mediation with the union Nov. 20 failed to reach a deal. (Joe Raedle/Getty Images)

Hostess Brands Inc., the makers of popular Twinkies and Ding Dongs snacks, will continue to seek a liquidation after mediation with the union failed to reach a deal in the 11th hour.

The company and its second biggest union went into court-ordered mediation Tuesday, Nov. 20, in an attempt to resolve their differences, as more than 18,500 jobs are on the line.

In a statement late Tuesday night, Hostess said, “A mediation today with the Bakery, Confectionary, Tobacco and Grain Millers Union was unsuccessful.” No additional details were provided.

On Wednesday, Hostess executives returned to a hearing in White Plains, N.Y., to request the closure of its 36 bakeries, 242 depots, 216 retail stores, and termination of more than 18,500 employees nationwide.

However, shutting operations will also cost tens of millions of dollars, and truckloads of goods will need to be discounted, sold at a loss, or donated.

“As we said on Friday when the company announced it was closing, this is a tragic outcome and our thoughts and prayers go out to all Teamster Hostess members and all Hostess employees,” said Teamsters General Secretary Treasurer Ken Hall in a statement. Teamsters represents 6,700 employees at Hostess, and had already agreed to 8 percent pay cuts and other benefit decreases in a prior round of discussions with the company.

Hostess has been in bankruptcy protection since January 2011 and has asked its unions to cut wage, health care, and other benefit costs in order to continue its operations. In fiscal year 2012, Hostess reported sales of $2.5 billion and a net loss of $1.1 billion.

Potential Bidders

Many of Hostess’s brands are iconic household names, including snacks bearing names including Twinkies, Ding Dongs, Drake’s, and Dolly Madison.

In a note to clients, SunTrust Robinson Humphrey analysts said that Georgia-based Flowers Foods Inc., a snack and baked goods maker, may make a play to bid for some of Hostess’s assets in a liquidation. Flowers makes the Tastycake brand of snacks.

Other potential suitors include Mexican baked goods maker Grupo Bimbo SAB, which makes Thomas’ English Muffins and Entenmann’s cakes.

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