April 11, 2013
KANSAS CITY, Mo.Hostess Brands, Inc., has obtained U.S. Bankruptcy Court approval to sell its Drake's® snack cake brand, as well as four of its northwest regional bread brands, in two separate transactions totaling approximately $58.4 million.
On April 9, U.S. Bankruptcy Judge Robert Drain approved the sale of the Hostess Drake's® snack cake brand and certain related assets to affiliates of McKee Foods Corp. for $27.5 million. Drake's products include Ring Dings®, Yodels®, Devil Dogs®, Yankee Doodles®, Sunny Doodles®, and Drake's Coffee Cake®.
He also approved the sale of Hostess Brands Sweetheart®, Eddy's®, Standish Farms®, and Grandma Emilie's® bread brands, four bakeries and certain other related assets to affiliates of United States Bakery for approximately $30.9 million.
The sale of Drake's® and the bread brands are the culmination of our efforts to sell the Company's major assets," said Hostess Chairman and CEO Gregory F. Rayburn. "All of the company's beloved brands can now live on and, importantly, we have maximized value for the company's stakeholders. We now turn our attention to selling remaining miscellaneous assets and completing the liquidation."
The two most recent sale approvals, Hostess Brands has now obtained court approval of five transactions totaling approximately $860 million in proceeds.
Previously Approved Transactions
Investment firms Apollo Global Management LLC and Metropoulos & Co. were given the go-head to purchase the majority of Hostess snack cake business, including Hostess® and Dolly Madison® branded products, five bakeries and certain equipment for $410 million. Among the products included are the company's Twinkies®, Ho Hos®, Ding Dongs® and Donettes® snack cakes.
Flowers Foods, Inc., won approval for its $360 million stalking horse bid for the majority of Hostess Brands bread business assets, including Wonder, Nature's Pride, Merita, Home Pride and Butternut bread brands; 20 bakeries; and certain other related assets. In a separate deal, Grupo Bimbo, S.A.B. de C.V. was selected as the winning bidder for the assets related to the Hostess Beefsteak bread business. Grupo Bimbo agreed to pay $31.9 million for the Beefsteak assets.
On Nov. 16, 2012, Hostess Brands filed a motion in U.S. Bankruptcy Court to shutter its operations and liquidate its assets as a result of a weeklong strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) International Union.
The Board of Directors authorized the wind down of Hostess Brands to preserve and maximize the value of the estate after one of the companys largest unions, BCTGM, initiated a nationwide strike.
On Nov. 21, 2012, the U.S. Bankruptcy Court for the Southern District of New York approved Hostess Brands emergency interim motion for the orderly wind down of its business and sale of its assets after the company and the Bakery, Confectionary, Tobacco and Grain Millers Union (BCTGM) were unable to reach an agreement during an 11th-hour mediation.
The shuttering of Hostess business operations resulted in the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs. Hostess Brands said it would sell its popular brands, including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Hos®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Natures Pride®, Merita®, Home Pride®, Butternut® and Beefsteak®, among others.
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