Hostess Brands, the bankrupt producer of bakery products in US, has selected two stalking horse bidders, McKee Foods and United States Bakery, for its Drake's snack cake brand and Sweetheart, Eddy's, Standish Farms, and Grandma Emilie's bread brands.
The combined acquisition amount under the two stalking horse bids is approximately $56.35m.
McKee Foods has agreed to pay $27.5m for the Drake's brand and certain equipment. Drake's product portfolio includes Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, and Drake's Coffee Cake.
United States Bakery has offered a bid to pay $28.85m for the Sweetheart, Eddy's, Standish Farms, and Grandma Emilie's bread brands, four bakeries, and 14 depots and certain equipment.
Hostess Brands chairman and chief executive officer Gregory Rayburn said that these agreements set the value a strong value for the brands and the company seeks to conduct an auction process that will further enhance the return for Hostess's stakeholders.
"The contemplated purchase prices for Drake's and the four bread brands, together with our previous announced stalking horse bid for the majority of our bread business, means we have agreements to sell these assets for at least $440 million," Rayburn added.
Hostess Brands, which has been affected by increasing debts, soaring labour costs and the changing tastes of consumers, filed for bankruptcy in January 2012 for the second time in its history, declaring assets of $982m and debt of $1.43bn.
In November, the company received approval from the US Bankruptcy Court in New York to close its business and sell its assets, a move which will lead to a loss of 18,500 jobs.
