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June 9, 2021updated 15 Jun 2021 10:54am

Mrs Dunster’s “shock” at Koffee Kup Bakery sale to Flowers Foods

The Canadian group thought it was set to buy regional US peer Koffee Kup Bakery.

Canada-based baker Mrs Dunster’s has expressed its “shock” at the sale of closed-down US business Koffee Kup Bakery to Flowers Foods.

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

However, Mrs Dunster’s, based in New Brunswick in eastern Canada, says it had been told by the receiver it had been the successful bidder for Koffee Kup Bakery, which closed in April.

Koffee Kup Bakery, which had marketed bread, English muffins, buns and donuts in the north east of the US, 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.

In a statement sent to Just Food yesterday by Mrs Dunster’s co-owner and co-CEO Blair Hyslop, the company said it had started working on agreements to finalise the sale upon being advised by the receiver that it would be the new owner.

“All parties were aligned to the need to get employees back to work, so in the meantime we worked with employees, vendors, customers, and distributors to do just that,” the statement read.

Mrs Dunster’s was, the statement continued, “fully prepared to start operations” yesterday “with purchase orders in hand, believing in good faith that the agreements we negotiated with the receiver would be signed Monday, June 7, 2021”.

The company added: “Yesterday, we were shocked to receive an insensitive letter from the receiver revealing that over the weekend, Key Bank and the receiver had negotiated the sale of Koffee Kup Bakery to a new party. To our knowledge, the new party did not participate in the original court-sanctioned process and has no immediate plans to operate the bakeries.

“As a family-owned company, we stood with our integrity on full display in front of employees, customers, vendors, and distributors to restore hope for the future. A large team of dedicated people worked tirelessly under tight timelines with the aim to get the much-beloved Koffee Kup Bakery back up and running. We are absolutely devastated for all the employees, vendors, distributors, and their local communities.”

At the start of April, US investment firm American Industrial Acquisition Corp. acquired Koffee Kup Bakery, a business set up in 1940.

According to a statement at the time from G2 Capital Advisors, which worked with Koffee Kup Bakery on the deal, the baker 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, 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.”

Just Food has asked Flowers and American Industrial Acquisition Corp. for further comment.

Asked if Mrs Dunster’s can seek legal recourse to overturn the sale of Koffee Kup Bakery to Flowers, Hyslop added: “We believe we have a strong case and are pursuing all options; it will take us some time to decide on the appropriate legal response.”

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