Hostess Brands Inc., the bankrupt maker of Wonder bread, said Apollo Global Management LLC (APO:US) and C. Dean Metropoulos & Co. agreed to pay $410 million for the majority of its snack business, including its iconic Twinkies.
In a court filing last night, Hostess said the only qualified bid received by a court deadline came from Apollo, Leon Black’s private-equity firm, and Metropoulos, a private- equity firm that owns Pabst Brewing Co. In a statement today, the company confirmed them as the winning bidders.
“Accordingly, pursuant to the bidding procedures order, no auction will be conducted and buyer is the successful bidder,” the lawyers said in a filing yesterday in U.S. Bankruptcy Court in White Plains, New York.
The private-equity firms will purchase the Hostess snack- cake business, which also includes Hostess CupCakes, Ding Dongs and Ho Hos, along with other assets including equipment and five bakeries.
“The agreement results in significant value for our stakeholders,” Hostess Brands Chief Executive Officer Gregory F. Rayburn said in a statement today.
Grupo Bimbo SAB (BIMBOA) won a Feb. 28 auction to buy the Beefsteak bread brand, beating an initial bid by Flowers Foods Inc. (FLO:US) with a $31.9 million offer. The Mexico City-based maker of Sara Lee products, Entenmann’s cakes and Thomas English Muffins topped Flowers’ $30 million opening offer for the rye-bread brand, Hostess said in a Feb. 28 statement. No rivals challenged Flowers’ $360 million bid for the majority of Hostess’s bread- making business, including its Wonder brand, and an planned auction was canceled.
Hostess received stalking-horse bids of more than $56 million for Drake’s and four bread brands that it plans to auction on March 15. McKee Foods Corp., maker of Little Debbie snacks, agreed to pay $27.5 million for Drake’s. United States Bakery Inc. offered to buy the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands, four bakeries and 14 depots, plus certain equipment, for $28.9 million, according to court papers.
The company is scheduled to seek bankruptcy court approval to sell the assets to the auction winners at a March 19 hearing. Hostess, founded in 1930, is liquidating after failing to reach an agreement with striking bakers on concessions to help the company emerge from its second bankruptcy.
The union representing the fired bakery workers said the bids for company brands offer no guarantees for workers.
“While the debtor’s secured lenders may view these bids as the ‘best’ for getting themselves paid, these bids provide minimal assurance that the rights of the debtors’ workers will be protected,” the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and its pension fund said in court papers today.
The union and the pension fund said they “support the sale of the debtors’ assets to companies that will commit to preserving jobs, recognize the rights of organized labor, and rebuild the Hostess brands.”
“Unfortunately, none of the proposed purchasers in any of the asset sales have committed to preserve a single job,” the union and pension fund said.
The case is In re Hostess Brands Inc., 12-bk-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).
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