Flowers poised to win most, not all, Hostess targets

by Eric Schroeder
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WHITE PLAINS, N.Y. — Only one of the two auctions set for tomorrow to determine the fate of several Hostess Brands’ assets will take place, according to multiple media outlets. While the stalking horse bid of up to $360 million bid for most of the Hostess bread brands appears to be unchallenged, serious competition is looming for its smaller bid for the Beefsteak rye brand.

Citing individuals familiar with the sale processes, The Wall Street Journal in a blog noted that Mexico-City-based Grupo Bimbo S.A.B. de C.V. has made an opening bid of $31.9 million for the Beefsteak brand, challenging a $30 million stalking horse bid from Thomasville, Ga.-based Flowers Foods, Inc. Grupo Bimbo’s bid includes the $900,000 breakup fee promised to Flowers if it loses at auction, plus the $1 million incremental bid necessary to participate in the Feb. 28 bidding, the person familiar with the sale process told the W.S.J.

Meanwhile, the Associated Press cited sources indicating that no auction will take place for the bulk of Hostess’ bread brands, including Wonder, after no other bidder stepped forward to make a competing offer to Flowers Foods’ $360 million bid on the table.

Any sales require approval by a bankruptcy court.

Hostess, Flowers and Grupo Bimbo have not commented on the auction details.

In addition to the two auctions that were scheduled for tomorrow, Hostess expects to run two more auctions in March. One would be for the Hostess snack cake brands, including Twinkies and Dolly Madison. Private equity firms Apollo Global Management L.L.C. and C. Dean Metropoulos & Co. are the stalking horse bidders for those brands with a bid of $410 million. The second auction would be for Hostess’ Drake’s cake business and additional bread brands. McKee Foods, maker of Little Debbie snack cakes, has the stalking horse bid of $27.5 million for Drake’s, while United States Bakery Inc., also known as Franz Family Bakery, has agreed to pay $28.85 million for the Sweetheart, Eddy's, Standish Farms and Grandma Emilie's bread brands.
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