Hostess gains court approval to sell majority of snack cake, bread businesses

Hostess Brands, a US-based bankrupt producer of bakery products, has attained US Bankruptcy Court approval to sell the majority of its snack cake and bread businesses in separate transactions that are together worth approximately $800m.

One of the transactions that has received approval is the sale of the majority of Hostess Brands’ snack cake business to private equity firms Apollo Global Management and Metropoulos & Co.

In a joint bid, Apollo and Metropoulos will pay $410m for the assets, which include Hostess and Dolly Madison branded products, five bakeries, and certain equipment.

The products covered by the deal include Twinkies, Ho Hos, Ding Dongs and Donettes snack cakes.

The court has also granted approval for the sale of the majority of Hostess’ bread business, including Wonder brand, to Flowers Foods, in a $360m deal.

In addition to the brands, this agreement includes 20 bakeries, 38 depots and other assets.

The other transaction that has received approval is the sale of the Beefsteak bread brand to Grupo Bimbo, for $31.9m.

Hostess Brands chairman and CEO Gregory Rayburn said that the company’s goal when it began the sale process was to maximise value for all of its stakeholders.

The company’s other proposed transactions, pending US Bankruptcy Court approval, include the sale of the Drake’s snack cake brand and certain equipment to McKee Foods for $27.5m; and the sale of Sweetheart, Eddy’s, Standish Farms, and Grandma Emilie’s bread brands, four bakeries, 14 depots, and certain equipment to United States Bakery for $30.9m.

Founded in 1930, Hostess Brands has been affected by increasing debts, soaring labour costs and the changing tastes of consumers; it filed for bankruptcy in January 2012 for the second time in its history, declaring assets of $982m and debt of $1.43bn.

In November 2012, Hostess received approval from the US Bankruptcy Court in New York to close its business and sell its assets.