Hostess: Wal-Mart Wants To Sell Genuine Twinkies

By: | 12/14/2012 05:42 PM ET
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Hostess has about two dozen serious bidders in the running for the now bankrupt and closed snack company, which includes Wal-Mart and Kroger Foods.

If the large retailer were to buy the Twinkie company, that would most likely mean they would monopolize on the sale of your favorite snack cakes, meaning you would only be able to buy them from Wal-Mart stores.

“Wal-Mart wouldn’t be selling Twinkies to Target,” says Colin McGranahan, a Sanford Bernstein analyst.

That might not be to bad for consumers who want to continue to buy Hostess Brand snacks, but if a smaller retailer such as Kroger were to win the bid, some would be left without, as Kroger does not have as many stores as Wal-Mart around the country, and there is no guarantee, they would sell to other retailers in areas they don’t cover.

According to Bloomberg, 50 percent of Wal-Mart’s revenue comes from grocery sales, and they have a roster of companies that make its store-brand products, that could handle the making of Hostess snack cakes, which gives Kroger an advantage.

“Outsourcing to someone else to make this stuff makes sense,” states McGranahan. “I would guess Wal-Mart would not be the actual manufacturer. And that sounds like that was the real problem with the business anyways.”

Kroger already owns production facilities, and the shift would be fairly easy.

Last month, financial adviser Joshua Scherer of Perella Weinberg Partners LP said the liquidation sale may generate about $1 billion. Other bidders envolved in the liquidation are only seeking certain brands under the Hostess brand and not the whole part like Wal-Mart and Kroger wanting.

By early January, Hostess expects to have initial bids for its various brands, which will then be put to auction.

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