Hostess Brands Inc. 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.
Hostess Brands Inc. 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. By utilizing the stalking horse process and selecting the initial bidders, Hostess is able to set the bar on the competitive bidding process and avoid “low-ball” bids for its assets.
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’ stakeholders,” said Hostess Brands Chairman and CEO 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’ bread business, including the Butternut, Home Pride, Merita, Nature’s Pride, and Wonder brands. Hostess has also selected Flowers as the stalking horse bidder for the company’s Beefsteak bread brand.
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.