Hostess Brands said Flowers’ bid was submitted as no other qualified bids were received for those assets. It is subject to approval at the US Bankruptcy Court on March 19.
Flowers paid $360m for Wonder Bread, Nature’s Pride, Butternut, Home Pride and Merita along with 20 bakeries, 38 depots and other assets.
CEO of Flowers Foods George E. Deese said the company expects the transaction could take several months before it is finalized.
“We are pleased Flowers won the bid for Hostess’ primary bread brands and bakeries without the need for an auction. Now we move forward with the next step, which is the bankruptcy court review. Following that, the transaction will continue through the regulatory process before it can be finalized,” Deese said.
Flowers had also bid $30m for Hostess’ Beefsteak assets but Grupo Bimbo topped the offer, agreeing to pay $31.9m.
Hostess Brands said it is still pursuing the sale of remaining brands, including Hostess, Dolly Madison, Drake’s, Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s.
‘Beloved bread’ back in business…
Gregory F. Rayburn, chairman and CEO of Hostess Brands said: “The proposed sales will result in significant proceeds for the benefit of the company’s stakeholders and ensure the beloved bread brands can continue to be enjoyed for years to come.”
David B. Durkee, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) said Flowers’ purchase of key bread assets puts iconic brands firmly on the path of getting back to business.
However, he said the success will rely on the company including highly-trained and experienced BCTGM members in its workforce.
“The BCTGM is integral to Flowers’ objective to restore these brands, as our members have the experience, expertise, and capability to provide ‘turn-key’ operations going forward…Our members provide Flowers the best chance of success in a seamless revival of operations,” Durkee said.
“Our goal is to preserve our members’ jobs and the legacy of these timeless bread brands,” he said.
The BCTGM was the union that went on strike last year, angered by a pay-cutting deal forced upon them by Hostess Brands as part of a five-year recovery plan to lift the business out of financial difficulties.
A plus to Flowers’ expansion plan
Flowers CEO said that should the acquisition go through, the Hostess assets will fit with the company’s long-term growth objective to reach more of the US population with its products.
“Since 2004, our company has expanded the reach of our fresh bakery products from about 38% of the US population to more than 70% today. We accomplished this by expanding into new markets from our existing bakeries, building new bakeries, and through strategic acquisitions,” Deese said.
“We have proven experience in integrating in integrating acquisitions, having completed more than 100 since 1968 and three significant ones in just the last three years – Tasty Baking, Lepage Bakeries, and the Sara Lee and Earthgrains brands in California,” he said.
The purchase of Sara Lee and Earthgrains brands was approved on February 25 and Deese said Flowers Foods is positioned to begin immediate roll-out of the brands.