US snack food manufacturer McKee Foods has been selected as the leading stalking horse bidder to acquire Hostess Brands' Drake's snack cake business for $27.5m.
Hostess Brands stated that the deal will be presented to the US Bankruptcy Court as no other qualified bidders emerged for the assets.
McKee has agreed to pay the amount for the Drake's brand and certain equipment. Drake's products include Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, and Drake's Coffee Cake.
On 15 March, Hostess Brands plans to conduct an auction for its Sweetheart, Eddy's, Standish Farms, and Grandma Emilie's bread brands. As the stalking horse bidder, United States Bakery has agreed to pay $30m for the brands, four bakeries, and 14 depots, plus certain equipment.
Other proposed transactions of Hostess include the sale of majority of its snack cake business to private equity firms Apollo Global Management and Metropoulos for $410m; the majority of the bread business assets to Flowers Foods for $360m; and assets related to the company's Beefsteak bread business to Grupo Bimbo for $31.9m.
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.
The company has been backed by Jones Day for legal advices and Perella Weinberg Partners served as the company's financial advisor.
