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June 14, 2021

Flowers “begun Koffee Kup Bakery takeover talks in April”

The acquisition by the US giant has frustrated a rival that thought it was set to buy the closed Vermont baker.

Flowers Foods, which has stunned a rival with its move to buy Koffee Kup Bakery, said its talks to buy the closed Vermont baker started two months ago.

Last Monday (7 June), Flowers, one of the largest bakery groups in the US, announced it had bought Koffee Kup Bakery from a court-appointed receiver.

The deal “shocked” Canada-based bakery group Mrs Dunster’s, which said it had been told by the receiver it was the successful bidder for the business.

Koffee Kup Bakery closed at the end of April after being owned by US investment firm American Industrial Acquisition Corp. (AIAC) for under a month.

The firm, set up in 1940, marketed bread, English muffins, buns and donuts in the north east of the US. It had two factories in Vermont and one in Connecticut.

Mrs Dunster’s had announced its plans to buy the assets on 28 May. At the time, it said it planned to re-open the bakeries in Vermont and sell the Connecticut site.

Reacting to Flowers’ announcement of its deal for Koffee Kup Bakery, the family-owned Mrs Dunster’s said on Wednesday it thought its deal with the receiver was set to be signed on Monday, the day its rival unveiled its transaction.

Flowers, Mrs Dunster’s added, “to our knowledge … did not participate in the original court-sanctioned process and has no immediate plans to operate the bakeries”.

Speaking to Just Food, a Flowers spokesperson said the company had been in negotiations with AIAC two months ago. “Flowers was involved in good-faith discussions concerning the purchase of the assets of Koffee Kup Bakery since April of this year with the owner at that time. We had signed an NDA and were waiting to hear back regarding our interest in the assets,” the spokesperson said.

“When it was announced that there was a preferred buyer, we were surprised – and realised the process had started moving forward without consideration of our interest. So, we immediately contacted the court-appointed receiver to ensure our offer was considered.”

Mrs Dunster’s co-founder Blair Hyslop has said the company believes it has “a strong case” and is “pursuing all options”, adding: “It will take us some time to decide on the appropriate legal response.”

The Flowers spokesperson refused to be drawn on its thoughts about any potential legal action Mrs Dunster’s may pursue.

When AIAC acquired Koffee Kup Bakery at the start of April, G2 Capital Advisors, which worked with the baker on the deal, said the company was “in the process of repositioning its business to capitalise on a compelling platform of established brands, private label partnerships, long-term relationships with blue-chip retailers and a vast distribution network”.

By the end of the month, Koffee Kup Bakery was closed. State-government filings showed 247 staff at the two Vermont bakeries had lost their jobs. A Connecticut state filing did not disclose the number of employees who had lost jobs at the third factory.

In Flowers’ statement announcing its purchase of Koffee Kup Bakery last Monday, president and CEO Ryals McMullian said: “This acquisition brings brands and production capacity in the north east, a key growth market for our company. The Koffee Kup and Vermont Bread Company brands have a strong consumer following in the region and we’ll be evaluating their role within our brand portfolio.”

McMullian said Flowers would not instantly open the factories but insisted the company is weighing up what to do with the sites. “We have no immediate plans to reopen the bakeries but will be assessing how they may fit our strategic network optimisation efforts in the future.”

The Flowers spokesperson did not comment when asked about when the company would decide on the fate of the Koffee Kup Bakery factories, or on its plans for the firm’s staff.

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