McKee’s bid for Drake’s brand holds up
IRVING, TEXAS — The $27.5 million bid put forth by Collegedale, Tenn.-based McKee Foods Corp. in late January for the Drake’s snack cake brand of Hostess Brands, Inc. will be the bid presented for approval to the U.S. Bankruptcy Court on April 9 after no other qualified bids were received for the assets by the March 12 deadline.
As part of the agreement, McKee has agreed to pay $27.5 million for the Drake’s brand and certain equipment. Drake’s products include Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles and Drake’s Coffee Cake.
“We know that Drake’s cakes are unique baked goods that have a loyal following,” said Mike McKee, president and chief executive officer of McKee. “McKee Foods is a family-owned bakery, similar to how Drake’s was established as a family bakery 125 years ago. We have generations of experience in baking, and we will strive to bake the Drake’s cakes, not just for taste and quality, but also to deliver on the memories of the loyal Drake’s fans.”
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. McKee Foods offers more than 90 varieties of Little Debbie and 32 varieties of Sunbelt Bakery snacks and cereals that are sold in all 50 states, Canada and Puerto Rico. The company is headquartered in Collegedale and has production facilities in Gentry, Ark., and Stuarts Draft, Va., and a warehouse and distribution center in Kingman, Ariz. McKee Foods also owns the Collegedale-based subsidiaries Blue Planet Foods, manufacturer of granola products, including Heartland cereals and pie shells, and Fieldstone Bakery, which provides institutional food service organizations with snacks and cereals. McKee has annual sales of about $1.1 billion.
Separately, Hostess Brands said it will proceed with an auction for its Sweetheart, Eddy’s, Standish Farms, and Grandma Emilie’s bread brands on March 15 after the company received additional qualified offers. Portland, Ore.-based United States Bakery, Inc., also known as Franz Family Bakeries, is the stalking horse bidder after agreeing to pay $30 million for the brands, 4 bakeries, and 14 depots, plus certain equipment.
Earlier this week Hostess announced the proposed sale of the majority of its snack cake business to affiliates of Apollo Global Management, L.L.C. and Metropoulos & Co. Apollo and Metropoulos have agreed to pay $410 million for the assets, which include both Hostess and Dolly Madison branded products, five bakeries and certain equipment. Among the products included are the company’s Twinkies, Ho Hos, Ding Dongs and Donettes snack cakes.
This week’s moves followed the earlier announcements that Hostess would sell the majority of the company’s bread business, including its Wonder brand, to Flowers Foods, Inc. for $360 million, and the sale of the Beefsteak bread brand to Grupo Bimbo, S.A.B. de C.V. for $31.9 million.
Hostess Brands will seek Court approval of the transactions on March 19.