Bankrupt bakery products maker Hostess Brands Inc., Tuesday selected Apollo Global Management LLC (APO) and Metropoulos & Co. as the winning bidder for the majority of its snack cake business, as momentum gains pace for the court auction process of its assets.
Apollo and Metropoulos' stalking horse bid will be presented for approval with the US Bankruptcy Court as no other qualified bids were received for those assets, said Hostess Brands in a statement.
Apollo and Metropoulos have agreed to pay $410 million to purchase the brands, five bakeries and certain equipment. Included in the sale are Hostess and Dolly Madison brands that make iconic cake products such as Twinkies, Ho Hos, Donettes.
Hostess Brands will request the US Bankruptcy Court for the Southern District of New York to approve the transaction at a hearing on March 19.
The stalking horse bidder is chosen by the bankrupt company to make the first bid at the final auction that sets the bar so that other bidders cannot bid below that purchase price.
Private-equity firm Hurst Capital LLP was also reported to be in the fray for Hostess' cake brands, which includes Hostess and Dolly Madison branded products, but failed to make it as the stalking horse bidder.
Hostess Brands earlier agreed to sell the majority of its bread business assets to Flowers Foods Inc. (FLO) for $360 million, including 20 bakeries, 38 depots and other assets.
The company also had selected Grupo Bimbo, S.A.B. de C.V. as the winning bidder for the assets related to its Beefsteak bread business at the conclusion of a February 28 auction. Grupo Bimbo agreed to pay $31.9 million for the assets. The Court will also consider approval of these brands at the same time on March 19.
Hostess Brands will on Friday conduct an auction for its Drake's snack cake business and Sweetheart, Standish Farms, Grandma Emilie's and Eddy's bread businesses that will have combined stalking horse bids of about $56.6 million.
Texas-based 82-year old Hostess Brands shut down 33 bakeries, 565 distribution centers, and 570 bakery outlet stores across the US in mid-November after hectic efforts to negotiate a labor contract failed. This led to disruption of its operations and left 18,000 of its staff jobless.
Hostess Brands filed for bankruptcy in January 2012, following which the US Bankruptcy Court ruled the implementation of an eight percent cut in worker's salary, reduction in pension plan obligations and as well on contributions to healthcare plans.
The Court approved on November 21 its emergency interim motion for the orderly wind down of its business and sale of its assets following the strike by unionized workers.
Wal-Mart Stores, Inc. (WMT), Kroger Co. (KR) were also said to be in the fray among the two dozen potential buyers for the brands and assets of Hostess Brands.
Hostess had earlier taken nearly five years to exit its first bankruptcy filed in 2004. The company emerged from that bankruptcy in 2009 as a privately-held company controlled by its lenders and buyout firm Ripplewood Holdings LLC.
Apollo closed Tuesday at $23.95, down 0.21%, on the NYSE.
Flower Foods closed at $28.67, up 0.49%.
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