Hostess plan to auction major bread brands approved
WHITE PLAINS, N.Y. -- Hostess may proceed with plans to sell its major bread brands in an auction with Flowers Foods, Inc. as the stalking horse bidder, said Judge Robert D. Drain, U.S. Bankruptcy Court for the Southern District of New York.
With the approval, qualified bids must be submitted by 5 p.m. on Feb. 25, and an auction will be conducted at 10 a.m. Feb. 28. Objections to the sale taking place must be submitted by 4 p.m. Feb. 25, and a hearing about the sale will be held March 5.
Flowers has signed a purchase agreement to acquire 20 baking plants, 38 depots and other assets for up to $360 million. Flowers also agreed to purchase the Beefsteak bread brand for $30 million.
In the final proposal, the break-up fee was amended to 3%, equating to $11.7 million, if another bidder prevails. The original plan called for a 3.5% fee.
In the period leading to the auction, Hostess and its advisors will coordinate bidders as they perform due diligence. Good faith deposits, to be held in escrow and equating to 5% of the purchase price, must be made to qualify as a bidder.
At the auction, participants (including Flowers) will be permitted to increase their bids. Bidding on the bread business assets will begin at the purchase price and terms proposed in the baseline bid, and will proceed afterward in increments of $1 million.
In a statement Jan. 25 following the hearing in which the auction plan was approved, support for the process was expressed by David B. Durkee, international president of The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.
“Today’s hearing on the stalking horse auction procedures for key bread assets sets the ground rules for a competitive bidding process for products including the Butternut, Home Pride, Merita, Nature's Pride and Wonder brands,” Mr. Durkee said. “Today’s announcements move these iconic brands one step closer to getting back to business.
“The goal is clear: for new ownership to emerge that values these assets and is committed to quickly restoring them to shelves across America before any additional brand erosion occurs. The B.C.T.G.M. is integral to this objective, as our members have the experience, expertise, and capability to provide ‘turnkey’ operations going forward.
“We look forward to an active and engaged process in this regard, and to discussions with all interested bidders across the bread and snack cake businesses.”