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Issue Date: Vol. 53, No. 2, February 2013, Posted On: 1/29/2013

Hostess Lines Up Lead Bidders For Drake's, Bread Brands

Emily Jed
TAGS: vending machine snacks, vendible pastries, vending cakes, Hostess Brands Inc., McKee Foods Corp., Little Debbie snacks, Drake's stalking horse bidder, Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles Drake's Coffee Cake, United States Bakery, Franz Family Bakery

IRVING, TX -- Hostess Brands Inc. has chosen McKee Foods Corp., maker of Little Debbie snacks, as the "stalking horse" bidder for its Drake's snack cake brand.

McKee Foods has agreed to pay $27.5 million for the Drake's brand, which includes iconic treats like Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, and Drake's Coffee Cake. The Collegedale, TN-based snack maker is bidding only on the brand and some equipment and not the Drake's Wayne, NJ, plant.

As the stalking horse bidder, McKee Foods will set the floor price for a court-supervised auction scheduled for March 15.

McKee Foods was founded in 1934 and introduced the Little Debbie brand in 1960. It has annual sales of about $1.1 billion and employs more than 5,000.

Separately, Hostess said that it has selected Portland, OR-based United States Bakery (known locally as the Franz Family Bakery) as the stalking-horse bidder for four of its bread products, including Sweetheart and Eddy's. The bakery has offered to pay $28.85 million for the bread brands, four bakeries and 14 depots, plus certain equipment.

United States Bakery has seven locations in the Northwest that produce breads, buns, bagels, cookies and pastries. It has 2,700 employees.

Earlier this month, Hostess selected Flowers Foods as the stalking horse bidder for the majority of the assets related to Hostess's bread business. Rivals can challenge Flowers at a Feb. 28 auction. A judge is set to review the winning bids at a sale hearing March 5.

Hostess still has not announced a lead bidder for its popular Twinkie brand. The company's lawyer said last week that Hostess is in advanced discussions with a number of parties for the remainder of its snack business, which includes Twinkies and Dolly Madison.

Hostess Brands Inc., based in Irving, TX, announced in November that it was shutting down its business and selling its bread and snack cake brands after its largest union, representing one-third of its workers, went on strike. | SEE STORY

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