McKee Takes Drake's Cakes, Hostess Rakes in $27.5 Million

Published in CSP Daily News

Winning and only bidder for baker's remaining snack cake brands

KANSAS CITY, Mo. -- Hostess Brands Inc. has announced that the stalking horse bid submitted by McKee Foods Corp. for the Drake's snack cake brand will be the bid presented for approval to the U.S. Bankruptcy Court as no other qualified bids were received for those assets and the auction was canceled.

McKee has agreed to pay $27.5 million 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. The company will ask the U.S. Bankruptcy Court for the Southern District of New York to approve the transaction at a hearing on April 9.

Separately, Hostess Brands will proceed with an auction for its Sweetheart, Eddy's, Standish Farms, and Grandma Emilie's bread brands on March 15 after the company received additional qualified offers. United States Bakery Inc., as the stalking horse bidder, has agreed to pay $30 million for the brands, four bakeries, and 14 depots, plus certain equipment.

The Irving, Texas-based company's other proposed transactions include the sale of the majority of the company's snack cake business to affiliates of Apollo Global Management LLC  and Metropoulos & Co. Apollo and Metropoulos have agreed to pay $410 million for the assets, which include both Hostess and Dolly Madison branded products, five bakeries and certain equipment. Among the products included are the Company's Twinkies, Ho Hos, Ding Dongs and Donettes snack cakes.

The sale of the majority of the company's bread business, including its Wonder brand, to Flowers Foods Inc. for $360 million. The agreement includes, in addition to the brands, 20 bakeries, 38 depots and other assets.

The sale of the Beefsteak bread brand to Grupo Bimbo SAB de CV for $31.9 million.

Hostess Brands will seek court approval of the above transactions on March 19.