US: Hostess names McKee, United States Bakery stalking horse bidders

By Katy Askew | 29 January 2013

Hostess yet to name a lead bidder for Twinkies business

Hostess yet to name a lead bidder for Twinkies business

Hostess Brands has named McKee Foods and United States Bakery as the stalking horse bidders for its Drake's cake business and various bread brands.

In a statement released late yesterday (28 January), Hostess said that McKee Foods has tabled an offer of approximately US$27.5m for Drake's, which makes Devil Dogs, Ring Dings and Yodels. McKee currently makes Little Debbie snack cakes.

Under a separate agreement, United States Bakery, also known as Franz Family Bakery, has offered $28.85m for Hostess bread brands including Sweetheart, Eddy's, Standish Farms and Grandma Emilie's.

These stalking horse bids set baseline offers and are still subject to a competitive auction process.

Earlier this month, Hostess reached a stalking horse agreement with Flowers Foods who has offered $390m for bread brands including Wonder, Butternut, Home Pride and Nature's Pride. The auction for these brands will be held next month (28 February).

Hostess is currently in the process of liquidating its business and selling off its assets and brands. The company received court approval to wind down its operations in November last year. The group is yet to announce a lead bidder for its iconic Twinkies brand. Pundits have suggested that Bimbo could be interested in some of Hostess's cake assets.

Show the press release

 

Combined Proposed Purchase Price Is $56.35 Million
-- Remaining Bread Brands Include Sweetheart®, Eddy's®, Standish Farms® and Grandma Emilie's®
-- Company Requests Court Permission to Conduct Auction to Obtain Highest and Best Offers
KANSAS CITY, Mo., Jan. 28, 2013 /PRNewswire/ -- Hostess Brands Inc. today announced that the Company has selected two stalking horse bidders for its Drake's® snack cake brand and for its Sweetheart®, Eddy's®, Standish Farms®, and Grandma Emilie's® bread brands.
The combined purchase price under the two stalking horse bids is approximately $56.35 million.
Under the first stalking horse agreement, McKee Foods Corporation has agreed to pay $27.5 million for the Drake's® brand and certain equipment. Drake's® products include Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, and Drake's Coffee Cake.
Under the second stalking horse agreement, United States Bakery, Inc. has agreed to pay $28.85 million for the Sweetheart®, Eddy's®, Standish Farms®, and Grandma Emilie's® bread brands, four bakeries, and 14 depots, plus certain equipment.
"These agreements once again set a strong value for our businesses and we look forward to conducting an auction process that will further enhance the return for Hostess's stakeholders," said Hostess Brands Chairman and Chief Executive Officer Gregory F. Rayburn. "The contemplated purchase prices for Drake's® and the four bread brands, together with our previous announced stalking horse bid for the majority of our bread business, means we have agreements to sell these assets for at least $440 million.
"We expect that figure to significantly increase once we announce a stalking horse bidder for the majority of our snack cake business, including Twinkies."
The Hostess snack cake business and the remaining bread business are contemplated to be sold in separate transactions.
As previously announced, Flowers Foods, Inc. was selected as the stalking horse bidder for the majority of the assets related to Hostess's bread business, including the Butternut®, Home Pride®, Merita®, Nature's Pride®, and Wonder® brands.
That agreement includes, in addition to the brands, 20 bakeries, 38 depots and other assets. The purchase price consists of $355 million in cash which will be increased to $360 million if certain license rights are included in the sale.
Hostess has also selected Flowers as the stalking horse bidder for the Company's Beefsteak® bread brand. The purchase price consists of $30 million in cash for the brand. The transaction does not include facilities or additional assets.
The Company will hold an auction for the majority of the bread business on February 28, provided the Company receives additional qualified bids, at the conclusion of which it will select the highest and best bidders.
Hostess has requested that the U.S. Bankruptcy Court for the Southern District of New York authorize the Company to proceed with a second auction for the Drake's® brand and the four bread brands on March 15.
All of the asset sales are subject to Court approval.
Jones Day provided legal advice to Hostess on the transaction.

 

Original source: Hostess Brands

Expert analysis

Bakery & Cereals Market in the US to 2016: Market Profile

The report presents detailed data on the Bakery & Cereals consumption trends in United States, analyzing the Bakery & Cereals consumption volumes and values at market and category level, brand share and distribution channel data. It examines the components of change in the market by looking at historic and future growth patterns – how consumers’ changes in behavior have affected total volumes, values, brands selected and type of products chosen.

Sectors: Bakery, Mergers & acquisitions

Companies: Hostess Brands, Flowers Foods

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