US: Hostess deal faces block by government objection

By Michelle Russell | 5 March 2013

Flowers Foods US$360m offer for the Wonder, Natures Pride, Merita, Home Pride and Butternut brands, includes 28 bakeries

Flowers Foods' US$360m offer for the Wonder, Nature's Pride, Merita, Home Pride and Butternut brands, includes 28 bakeries

The proposed sale of the majority of Hostess Brands' bread businesses to Flowers Foods subsidiary FBC Georgia is facing a block after an objection to the deal was filed by the US Government.

Hostess, which last year went into liquidation following a bakery union strike that paralysed its operations, agreed a deal late last month to sell its Wonder, Nature's Pride, Merita, Home Pride and Butternut brands, includes 28 bakeries and around 28 depots, to Flowers Foods for US$360m. The transaction now requires approval from the bankruptcy court overseeing Hostess' liquidation. 

Attorney Preet Bharara, however, filed an objection in the US Bankruptcy Court in Manhattan this week, claiming the deal frees the buyer of liabilities and limits the government's ability to regulate.

"The proposed sale order, as currently drafted, would diminish or eliminate the government's ability to enforce generally applicable police and regulatory statutes and regulations, and diminish or eliminate the buyer's and debtor's obligations to comply with environmental, health and safety laws," Bharara said in the filing.

A hearing for the proposed transactions is scheduled for 19 March. 

Hostess could not be reached for comment at the time of going to press.

Sectors: Bakery, Mergers & acquisitions

Companies: Flowers Foods, Hostess Brands

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