Hostess selects McKee Foods as winning bidder for Drake’s snack cake brand

Hostess Brands, US-based bankrupt producer of bakery products, has announced that the $27.5m stalking horse bid by snack food manufacturer McKee Foods has been selected as winning bid for the company’s Drake’s snack cake brand.

Hostess said that the bid will be presented for approval to the US Bankruptcy Court as no other qualified bids were received for the brand.

McKee placed the bid for the Drake’s brand, which includes products like Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles, and Drake’s Coffee Cake, as well as certain equipment.

Meanwhile, Hostess Brands has announced that it will proceed with an auction for its Sweetheart, Eddy’s, Standish Farms, and Grandma Emilie’s bread brands.

United States Bakery, the stalking horse bidder, has agreed to pay $30m for these brands, four bakeries, and 14 depots, along with certain equipment.

Recently, Hostess selected the $410m stalking horse bid submitted by private equity firms Apollo Global Management and Metropoulos as the winning bid for the majority of its snack cake business.

The company’s other proposed transactions include the sale of the majority of its bread business, including its Wonder brand, to Flowers Foods, for $360m.

In addition to the brands, the agreement comprises 20 bakeries, 38 depots and other assets.

At the conclusion of a 28 February auction, Grupo Bimbo was selected as the winning bidder for the assets related to the company’s Beefsteak bread business.

Founded in 1930, Hostess Brands has been affected by increasing debts, soaring labour costs and the changing tastes of consumers; it filed for bankruptcy in January 2012 for the second time in its history, declaring assets of $982m and debt of $1.43bn.

In November 2012, Hostess received approval from the US Bankruptcy Court in New York to close its business and sell its assets.