Report: McKee looks to buy Drake's from Hostess
by Eric Schroeder
COLLEGEDALE, TENN. — McKee Foods Corp., maker of Little Debbie snack cakes, has offered $25 million to $30 million for the Drake’s brand of Irving, Texas-based Hostess Brands Inc., according to an article in The Wall Street Journal. The Drake’s brand includes products such as Devil Dogs, Ring Dings and Yodels.
Citing people familiar with the situation, the W.S.J. said Hostess plans to file a stalking-horse bid for the Drake’s business today in the U.S. Bankruptcy Court in White Plains, N.Y.
The proposed transaction would require a judge’s approval to be put into action, and the offer would be subject to higher bids at auction.
McKee Foods was founded in 1934 by O.D. and Ruth McKee in Chattanooga, Tenn. The company introduced the Little Debbie brand in 1960, basing the name and logo on the founders’ granddaughter. The company has annual sales of about $1.1 billion.
Hostess still hasn’t announced a lead bid for its Twinkie’s brand, but according to the W.S.J., Heather Lennox, a Jones Day attorney representing Hostess, said at a Jan. 25 hearing that the company was “in advanced discussions with a number of parties to be a stalking-horse bidder” for the main snack-cake business, which includes the Twinkie and Dolly Madison brands. The company’s professionals expect to file papers disclosing the proposed deal “in the near term,” she said.
In addition to McKee Foods, multiple media outlets have identified C. Dean Metropoulos & Co. and Apollo Global Management as possible buyers of Hostess Brands, Inc.’s snack cakes businesses.