Hostess chooses United States Bakery for some Northwest assets

by Eric Schroeder
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WHITE PLAINS, N.Y. – United States Bakery, Inc., Portland, Ore., has emerged as the likely buyer for a number of the Northwest bread assets of Hostess Brands Inc., Irving, Texas, according to a Jan. 28 filing by Hostess in the U.S. Bankruptcy Court for the Southern District of New York.

According to Hostess, United States Bakery, also known as Franz Family Bakeries, has been selected as the stalking horse bidder for several Hostess brands located in the Northwest, including Sweetheart, Eddy’s, Standish Farms, and Grandma Emilie’s.

Under the agreement, United States Bakery would pay $28.85 million in cash for the brands, 4 baking plants, 14 depots and other assets. The four baking plants are located in Anchorage, Alaska; Billings, Mont.; Salt Lake City; and Seattle. The 14 depots are located in Heyburn, Idaho Falls, Montpelier, Pocatello and Twin Falls, Idaho; Billings, Mont.; Bismarck, N.D.; Midvale, Provo, Salt Lake City (2) and Logan, Utah; and Everett and Tacoma, Wash.

The Eddy’s brand has been distributed in Idaho for more than 103 years with a range of bread offerings, including sandwich, buttermilk and cracked wheat bread, according to Hostess. The majority of production and sales were attributed to the Salt Lake City facility, and the brand primarily was sold through the retail grocery channel.

Grandma Emilie’s is a brand in Utah that is “primarily known for its dense texture and sweet taste profile,” according to Hostess. The brand includes old fashioned white and wheat bread. Production and sales were attributed to the Ogden facility, and the brand primarily was distributed through retail grocery channels.

The Sweetheart brand was sold in the Idaho, Montana and North Dakota bread areas for more than 64 years. The brand is known for its white and wheat brand as well as its hot dog and hamburger buns, Hostess said. Sweetheart was produced out of the Billings facility.

Hostess said it received 13 other bids to purchase portions of its bread brands and selected related assets.

The purchase agreement between Hostess and United States Bakery includes an $865,000 break-up fee, and the transaction is expected to be closed no later than May 30.

Hostess earlier this month selected Thomasville, Ga.-based Flowers Foods, Inc. as the stalking horse bidder for the majority of the assets related to Hostess’ bread business, including the Butternut, Home Pride, Merita, Nature’s Pride, and Wonder brands. That agreement includes, in addition to the brands, 20 bakeries, 38 depots and other assets. The purchase price consists of $355 million in cash which will be increased to $360 million if certain license rights are included in the sale.

Hostess also has selected Flowers as the stalking horse bidder for the company’s Beefsteak bread brand. The purchase price consists of $30 million in cash for the brand.

“These agreements once again set a strong value for our businesses and we look forward to conducting an auction process that will further enhance the return for Hostess’ stakeholders,” said Gregory F. Rayburn, chairman and chief executive officer of Hostess Brands. “The contemplated purchase prices for Drake’s and the four bread brands, together with our previous announced stalking horse bid for the majority of our bread business, means we have agreements to sell these assets for at least $440 million.

“We expect that figure to significantly increase once we announce a stalking horse bidder for the majority of our snack cake business, including Twinkies.”
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