Hostess Brands has chosen a joint $410m offer from two investment firms — C. Dean Metropoulos & Co. and Apollo Global Management LLC — as the lead bid for Twinkies and other snack cake brands as it completes the process of filing ‘stalking horse’ bids for its assets.
Apollo and Metropoulos are offering $410m for brands including Twinkies, Mini Muffins, Cup Cakes, Ho Hos, Zingers and Suzy Q’s, five bakeries and certain equipment, said the firms in a joint statement.
“The agreement provides for the acquisition of the assets of Hostess Snacks free and clear and does not require Apollo and Metropoulos to assume any of Hostess Snacks’ liabilities or other obligations.”
Significant potential for renewed growth and expansion into additional channels
Metropoulos - which has invested in several high profile food and beverage firms including Ghirardelli Chocolates and Mumm and Perrier Jouet Champagnes - said there was strong consumer support for the brands.
Chief executive C. Dean Metropoulos said: “For more than 25 years we have had the opportunity to acquire and grow some of the world’s most widely recognized consumer food and beverage brands, and I look forward to working with Apollo in rebuilding these heritage brands and ensuring their long term availability to their loyal consumers.
“Never before have we seen such a groundswell of support and desire for a brand’s return and revival.”
Andy Jhawar, head of Apollo’s Consumer and Food Retail Industry Group, added: “We believe the Hostess Snacks brands we agreed to acquire offer significant potential for renewed growth and expansion into additional channels of distribution.”
Rayburn: Interest in these iconic brands has been intense and competitive
If approved, the offer will serve as the opening bid in an auction Hostess is hoping to run on March 13, said Hostess chief executive Gregory Rayburn.
“Interest in these iconic brands has been intense and competitive and we expect that to continue through a robust, court-authorized auction process.
“The ultimate goal will be the same we have had since we began marketing all of our assets - to maximize value for all of the company's stakeholders and ensure these great products can be enjoyed by their loyal fans for many years to come."
The collective stalking horse bids filed to date have set a floor of $856m for the bulk of Hostess’ assets, some way below the estimate of about $1bn given by financial adviser Joshua Scherer of Perella Weinberg Partners LP at a hearing in November.
There are still some very small brands for which offers have not yet been submitted, including bread brands J.J. Nissen, Colombo and Cotton (which represent about 5% of Hostess' total bread sales). A spokesman told FoodNavigator-USA: "We have made no announcements about any other offers [aside from those by Flowers, Apollo & Metropoulos, McKee and USB]."
McKee Foods, United Stakes Bakery and Flowers Foods
There has been a steady stream of announcements about Hostess assets since Christmas, with McKee Foods offering $27.5m for Drake's (Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles etc); and United States Bakery, Inc (Franz Bakery) offering $28.85m for the Sweetheart, Eddy's, Standish Farms, and Grandma Emilie's bread brands, four bakeries, and 14 depots, plus certain equipment earlier this week.
Meanwhile, Flowers Foods has made a $390m offer for Beefsteak, Butternut, Home Pride, Merita, Nature's Pride and Wonderbread plus 20 bakeries and 38 depots.
A stalking-horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company from a pool of bidders that sets the bar so other bidders can't low-ball the purchase price. Once the stalking horse has made its bid, other potential buyers may submit competing bids during an auction process.
Baker's union: 'We share these bidders’ goal of quickly restoring Twinkies... to shelves across America'
David B. Durkee, International President of The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), said: “We share these bidders’ goal of quickly restoring Twinkies, CupCakes, Ding Dongs and Ho Hos, among others, to shelves across America, and view new, serious ownership as a necessity for building a sustainable model for these brands moving forward.
"The BCTGM looks forward to the opportunity to work together productively; and is now engaging with bidders who recognize the value that we can bring to an ongoing business.”
Hostess Brands filed for a full shut down and sale of its assets last November after nationwide strikes from members of the BCTGM, who were angered by a pay-cutting deal enforced upon them as part of a recovery plan to lift Hostess out of financial difficulties.
The liquidation led to the closure of 33 bakeries, 565 distribution centers, around 5,500 delivery routes, 570 bakery outlet stores across the US and 18,500 job losses.