Bids for Hostess’ Brands now total $440 million
By KAREN ROBINSON-JACOBS
Hostess Brands, which hopes to fetch at least $1 billion for its brands, buildings and other assets, announced two bids Monday for cakes and bread that bring the total offered so far to more than $440 million.
McKee Foods Corp., best known for its Little Debbie snack cakes, has emerged as the lead bidder for the Drake’s snack cakes formerly made by the bankrupt Hostess.
Privately held, family-run McKee, based in Collegedale, Tenn., offered $27.5 million, the best offer from a group of at least 10 bidders, Irving-based Hostess said.
Drake’s makes a line of devil’s food cakes including Devil Dogs, Yodels, Funny Bones and Ring Dings. An auction for the Drake’s cakes, which typically sold in the Northeast, is expected to be March 15.
Hostess also said Portland, Ore.-based 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, 14 depots and some equipment.
The combined purchase price under the two new lead bids — called stalking horse bids — is about $56.35 million. Combined with previously announced bids of $390 million for 93 percent of its bread lines, Irving-based Hostess now has bids that total more than $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,” Gregory Rayburn, Hostess Brands’ chairman and chief executive, said in a statement.
An analyst working with Hostess said the assets could fetch $1 billion.
A lead bidder for the Twinkies brand is expected “in the near term,” an attorney for Hostess said. Hostess expects to sell the Hostess and Dolly Madison brands together.
McKee brings in about $1.2 billion in annual sales and has a workforce of more than 5,000 employees — less than a third the size of Hostess before it shut operations in November after a crippling strike by its bakers union.
Like Hostess, McKee has no manufacturing plants in Texas.
United States Bakery, a family-owned and privately held company, said the deal, if successful will allow the company to continue its “long-range growth plans through acquisition and market expansion.”
“We believe the assets and brands will allow us to provide fresh-baked Franz Bakery products to a wider and diverse geographical base,” Bob Albers, United States Bakery’s chief executive, said in a statement.
It also has no operations in Texas.
Follow Karen Robinson-Jacobs on Twitter at @krobijake.