Hostess Names Flowers as Lead Bidder for Bread Business
Posted by Warm Southern Breeze on Sunday, January 13, 2013
The saga continues.
“We are pleased with the Flowers offers and look forward to a robust auction process that will allow these iconic brands to continue and to maximize value for all of the company’s stakeholders,” Hostess Chief Executive Officer Gregory F. Rayburn said yesterday in a statement.
The proposed accord with Flowers Foods includes the purchase of the Wonder, Butternut, Home Pride, Merita and Nature’s Pride brands, 20 bakeries, 38 depots and other assets for $355 million, which may be increased to $360 million if certain license rights are included in the sale. The remaining bread brands, as well as its snack cake business, will be sold separately, according to the statement.
Flowers Foods, based in Thomasville, Georgia, also agreed to
serve as the lead, or stalking-horse, bidder for the company’s Beefsteak bread brand for $30 million. The accord doesn’t include facilities or additional assets, according to the statement.
“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,” George Deese, the company’s chief executive officer, said in a statement.
Flowers Foods, established in 1919, produces and markets packaged bakery foods for its retail and food-service customers. The company’s top brands are Nature’s Own and Tastykake.
The Hostess liquidation sales may generate about $1 billion, financial adviser Joshua Scherer of Perella Weinberg Partners LP said at a court hearing in November. The bidding process conducted by Perella involved contact with 169 possible purchasers, 87 of which signed confidentially agreements, the company said in the statement.
Hostess lawyers said at a December court hearing that the company’s cake brands had drawn multiple bidders. Potential buyers separately were interested in other Hostess products or manufacturing plants, said Heather Lennox, an attorney for the Irving, Texas-based baker.
“We also continue to negotiate with parties interested in purchasing our snack cake business and remaining bread brands and expect to select additional stalking horse bidders as soon as reasonably practicable,” Rayburn said in yesterday’s statement.
A hearing to consider approval of bidding procedures is set for Jan. 25. Hostess has requested a Feb. 28 auction date and a March 5 court hearing to authorize the sale to the highest or otherwise best bidders. The Flowers proposals are subject to court approval.
The 82-year-old maker of Hostess CupCakes, Ding Dongs and Ho Hos began to wind down operations in November after failing to reach an agreement with its striking bakers’ union on concessions to help it emerge from its second bankruptcy. Changes in American diets led to years of declining sales at Hostess, while ingredient costs and labor expenses climbed.
A standoff with striking union workers triggered liquidation auctions of Hostess’s brands, recipes, plants and other assets. The Bakery Confectionery Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after U.S. Bankruptcy Judge Robert Drain in White, Plains, New York, imposed contract concessions opposed by more than 90 percent of the union’s members. The union represents more than 5,000 Hostess workers.
Hostess emerged from an earlier bankruptcy in 2009 under the control of buyout firm Ripplewood Holdings LLC and lenders. The company, previously known as Interstate Bakeries Corp., changed its name to Hostess Brands in October of that year. Hostess entered its bankruptcy again in January 2012.
The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04-45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).
To contact the reporter on this story: Dawn McCarty in Wilmington at dmccarty
To contact the editor responsible for this story: John Pickering at jpickering
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/
“…if anything was not well said, that is to be attributed to my ignorance.”
–St. Thomas Aquinas, upon his deathbed, 7 March 1274
Sent from my typewriter.