Irving / TX. (hbi) Hostess Brands Inc. announced that the Company 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 USD.
Under the first stalking horse agreement, McKee Foods Corporation has agreed to pay 27,5 million USD 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 USD 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», said Hostess Brands Chairman and Chief Executive Officer 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 USD».
«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´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 USD in cash which will be increased to 360 million USD if certain license rights are included in the sale.
Hostess has also selected Flowers as the stalking horse bidder for the Company´s «Beefsteak» bread brand. The purchase price consists of 30 million USD in cash for the brand. The transaction does not include facilities or additional assets.
The Company held 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. All of the asset sales are subject to Court approval. Jones Day provided legal advice to Hostess on the transaction.
