Hostess Selects Four 'Stalking Horse' Bidders for Assets
Bankrupt Hostess Brands has selected four "stalking horse" bidders for different portions of its assets as it heads into court-ordered auctions beginning on Feb. 28.
First up was Flowers Foods Inc. The $2.8-billion baker based in Thomasville, Ga., on Jan. 11 said it signed two asset purchase agreements for most of Hostess' bread brands. Those brands include Wonder, Nature's Pride, Merita, Home Pride and Butternut, plus 20 bakeries and approximately 38 depots for a total price of $360 million. Another agreement provides for the purchase by Flowers of the Beefsteak brand for $30 million.
Two weeks later, McKee Foods Corp., the Collegedale, Tenn., maker of Little Debbie snack cakes, agreed to pay $27.5 million for the Drake's brand of snack cakes and certain equipment. Drake's products include Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, and Drake's Coffee Cake.
United States Bakery Inc., a closely held baker in Portland, Ore., said it will pay $28.85 million for the Sweetheart, Eddy's, Standish Farms and Grandma Emilie's bread brands, four bakeries, 14 depots and some equipment.
Finally, Apollo Global Management LLC and Metropoulos & Co. offered $410 million for the remainder, the majority of the assets of Hostess’ snack cake business, which includes both Hostess and Dolly Madison branded products (and includes the iconic Twinkies brand). Included are five bakeries and certain equipment.
Metropoulos & Co. is largely owned by C. Dean Metropoulos, who has invested in many food companies. He is or has been involved in Pinnacle Foods, Pabst Brewing, Heritage Brands, International Home Foods, Stella Foods, Morningstar Group and Bumble Bee Foods.
With Hostess in court-approved liquidation, any asset sales are subject to auctions – which means higher bids could come in at that time. But as “stalking horse” bidders, these companies set a minimum floor for these assets, and they will receive cancellation fees if a higher offer comes in.
Hostess Brands has requested the U.S. Bankruptcy Court for the Southern District of New York, which is handling this case, to authorize the auction for the majority of the bread business – involving Flowers -- on Feb. 28. The majority of the assets of the snack cake business – the ones involving Apollo and Metropoulos – may be auctioned on March 13. The auction for the Drake's brand and the four bread brands may come on March 15.
Sales to the winning bidders require court approval.
"The stalking horse bids have set a floor of more than $850 million for the bulk of the company's assets," Mr. Rayburn said. "We look forward to competitive auctions to further drive value for all of the company's stakeholders."
Flowers’ top executive said of his company’s potential purchase: "This agreement is consistent with Flowers Foods' long-term growth objectives to reach significantly more of the U.S. population with its fresh breads, buns, and rolls," said George Deese, chairman and CEO of Flowers Foods. Flowers bakes under such brands as Nature’s Own, Sunbeam bread, Tastykake and Mrs. Freshley's.
See this timeline of events as reported on FoodProcessing.com:
- Hostess Files For Chapter 11 Again (01/12/2012)
- Largest Union Strikes Hostess Brands (11/09/2012)
- Hostess Files Bankruptcy Reorganization Plan (10/11/2012)
- Struck Hostess Brands to Liquidate (11/16/2012)
- Hostess, Union To Try Mediation (11/20/2012)
- Hostess Back to Liquidation (11/21/2012)
- Flowers Offers 'Stalking Horse' Bid For Hostess Bread Brands (01/15/2013)
- All Hostess Assets Sold Off (04/04/2013)