Flowers Foods to acquire certain Hostess bread brands

Flowers Foods, a US-based producer of packaged bakery foods, has signed two agreements to purchase certain bread brands, bakeries and depots from Hostess Brands, the bankrupt producer of bakery products, for $390m.

As per one of the agreements, Flowers Foods will pay $360m to acquire the Wonder, Butternut, Home Pride, Merita and Nature’s Pride brands, along with 20 bakeries and 38 depots.

The other agreement is for the purchase of Hostess’s Beefsteak brand for $30m.

However, the transactions are subject to a court-approved bankruptcy process, as well as to higher bids, and a court approval of the winning bid is mandatory.

Flowers Foods believes that the new acquisitions will be accretive to 2013 profits, and plans to finance the transactions through a combination of cash on hand and debt.

Flowers Foods chairman and chief executive officer George E Deese said that the agreement is consistent with the company’s long-term growth objectives to reach more of the US population.

"We believe these assets would enhance our ability, over time, to provide more US consumers with quality baked foods at a good value through existing and new retail and foodservice customers," Deese added.

Hostess Brands filed for bankruptcy in January 2012, 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.

In December, the company announced that it was in talks with several bidders over the sale of its brands.

Following the latest acquisition deal with Flowers Foods, Hostess will continue to negotiate with potential buyers interested in purchasing its snack cake business and remaining bread brands.

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Image: Flowers Foods expects that the new acquisition deals will be accretive to 2013 profits. Photo courtesy of PRNewsFoto/Flowers Foods.