McKee Foods of Collegedale, Tenn., became the “stalking horse” bidder for another group of Hostess products, including Devil Dogs, Funny Bones, and Yodels, with a filing in the New York Bankruptcy Court of Judge Robert Drain, late in the afternoon Monday, Jan. 28. The $27.5 million bid is another step forward, allowing Irving, Texas-based Hostess Brands to move ahead with its court-approved plans to liquidate all its brands.
It is much like the anticipation leading up the announcement of Oscar nominees. Almost everyone has agreed that certain names will be on the bidder list but, until today, nobody would confirm anything. And specific information is still hard to come by.
A second offer today, reported by The Wall Street Journal, introduced a new name into the mix, Franz Bakery, or United States Bakery, Inc., of Portland, Ore., submitted a $28.85 million bid for certain other Hostess breads, including Sweetheart, Eddy's, Standish Farms and Grandma Emilies bread brands. The offer includes four bakeries, 14 depots and some equipment, according to the news report. There is no information yet regarding the specific bakeries.
Both McKee Foods and Franz Bakeries have long histories in the business; both are also privately-owned.
If the circulating reports have any validity, at least one other bid for additional products may be filed and made public in the near future: Hostess is said to be negotiating for the long-anticipated starting bid for the iconic Twinkies snack cakes, with perhaps a few other treats included.
The prime candidate for those products is C. Dean Metropoulos & Co., in association with Apollo Global Management. Daren Metropoulos, who head the company which also owns Pabst Brewing, has confirmed his company’s interest in Twinkies, but has released no other details.
However, again, there is some uncertainty because new reports circulating in the last few days hint that Hostess may also be in negotiations with the 26-year-old Hurst Brothers of Florida, known as the “tech twins,” who soon after Hostess filed for liquidation expressed interest in acquiring the rights to bake and sell Twinkies. Hostess Donettes ranked number one in sales nationwide in convenience stores, with other Hostess products claiming the next five spots as well.
Today’s offer by McKee, which currently produces the Little Debbie’s brands known to U.S. servicemen worldwide because they are stocked by military commissaries, reportedly does not include the bakery in Wayne, N.J., which produced Drake’s Cakes, nor any others. That New Jersey bakery is the only large-scale kosher bakery in the United States, and Hostess representatives are reportedly negotiating with other interested bidders for that asset, along with select other facilities.
Flowers Foods of Thomasville, Ga., was previously named the lead bidder for a batch of breads and a total of 20 bakeries in two separate offers totaling $390 million.
When Hostess shuttered its bakeries and sales outlets, and shut down operations in November 2012, it operated 33 bakeries (three additional facilities had been closed earlier), 5500 delivery routes nationwide, 570 owned and leased outlet stores, and 565 distribution centers. It had agreements with 12 different unions, and approximately 18,300 workers were employed by the 80-year-old company, which had faced recurring labor problems.
Hostess Brands, in fact, was the product of previous bankruptcy and reorganization of the company formerly known as Interstate Brands. The company reported sales of approximately 2.5 million dollars, but rising debt and labor problems, as well as aging equipment became factors in its ultimate demise.
The company has maintained since November that quick sales of assets would maximize return to investors; and it is pushing to begin the court-approving bidding process next month, with sales expected to close as early as mid-March.
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