Hostess Brands Inc. has selected two stalking horse bidders for its Drake’s snack cake brand along with its Sweetheart, Eddy’s, Standish Farms and Grandma Emilie's bread brands. The combined purchase price under the two bids is approximately $56.35 million.
Under the first stalking horse agreement, McKee Foods Corp. 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," Hostess Brands chairman and chief executive officer Gregory F. Rayburn said in a statement. "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.”
Deal for Twinkies draws near
Private equity firms Apollo Global Management LLC and C. Dean Metropoulos & Co. are near a deal to buy snack cake brands including Twinkies from bankrupt Hostess Brands Inc., according to a Jan. 22 report from Reuters. A deal, part of Hostess's bankruptcy reorganization, is not final, said the source cited in the article.
The so-called stalking horse bid would be for more than $400 million, according to the Wall Street Journal. It would serve as the baseline offer for the business and could be topped by others at an auction.
And 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 its Beefsteak bread brand. The purchase price consists of $30 million in cash for the brand. The transaction does not include facilities or additional assets.
Hostess will hold an auction for the majority of the bread business on Feb. 28 to select the highest and best bidders.