Hostess to sell certain snack cake business assets in private equity deal

Hostess Brands, the bankrupt producer of bakery products in the US, has selected the stalking horse bid submitted by private equity firms Apollo Global Management and Metropoulos as the winning bid for the majority of its snack cake business.

Hostess Brands noted that the deal will be presented to the US Bankruptcy Court as no other qualified bidders emerged for the assets.

In a joint bid, Apollo and Metropoulos have agreed to pay $410m to purchase both Hostess and Dolly Madison branded products, five bakeries and certain equipment.

The products included in the deal comprise Twinkies, Ho Hos, Ding Dongs and Donettes snack cakes.

Hostess Brands chairman and chief executive officer Gregory F. Rayburn said that the agreement results in significant value for the company’s stakeholders, and the company plans to put the proposed transaction before the court next week.

Recently, Hostess announced Flowers Foods as the highest bidder for the majority of the assets related to the company’s bread business, including the Butternut, Home Pride, Merita, Nature’s Pride and Wonder brands.

Flowers Foods agreed to pay $360m for the majority of the bread business assets including the brands, 20 bakeries, 38 depots and other assets.

At the conclusion of a 28 February auction, Grupo Bimbo was selected as the winning bidder for the assets related to the company’s Beefsteak bread business.

On 15 March, Hostess Brands plans to conduct an auction for its Drake’s snack cake business and Sweetheart, Standish Farms, Grandma Emilie’s and Eddy’s bread businesses, for which the combined stalking horse bids total about $56.6m.

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.