US: Flowers extends loan facility amid link to Twinkies
BMO Capital Markets believes Flowers Foods could be suitor for Hostess brands like Twinkies
Flowers said the agreement with its lenders "provides for a new five-year term" and allows the company to request extra cash up to $700m "upon the satisfaction of certain conditions".
The company, which owns brands including Tastykake and Sunbeam Bread, has been touted as a possible suitor for assets Hostess's management looks to sell as it winds up the business.
Hostess announced on Friday it would end operations after a nationwide strike that it claimed "crippled" the company. Workers affiliated to the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on industrial action in protest at company demands for pay cuts.
Hostess said it expects there to be interest in its brands but concedes some of its bakeries will not find a buyer.
BMO Capital Markets analyst Amit Sharma said Flowers would be "one of the most eligible acquirers" of Hostess's assets. He pointed to Flowers' "strong balance sheet, and "relatively small overlap with Hostess in key markets and segments" as two factors behind his belief the company would be among the front runners for brands like Twinkies.
Announcing the new loan agreement, Flowers did not comment directly on the Hostess situation but said the funds could be used in areas of the business including "acquisition financing".
CFO Steve Kinsey said: "This amendment to our credit facility positions us to take advantage of an assortment of opportunities as we work to achieve our expansion goals."
Officials at Flowers could not be reached for further comment.
US breakfast cereal group Post Holdings kicks off a relatively quieter week of results with its half-year numbers on Monday. On Tuesday, meat giants Marfig and JBS will report on how it fared in the f...
The new Hostess Brands has announced plans to re-open plants in Indiana and Illinois as the US baker looks to rebuild its production network....
- BRICs and beyond: Fonterra, Beingmate partnership
- Consuming issues: The hunger-obesity paradox
- On the money: Hormel still looking for M&A
- On the money: Mengniu hones in on "star" brands
- just-food interview: Agropur CEO Robert Coallier
- Fonterra, Beingmate launch infant formula JV
- Mondelez eyes snacks categories in India
- Parmalat nears Lacteos Brasil acquisition
- UK firm Pasta Reale enters administration
- Italy yoghurt woes lead to Emmi profit warning