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WHITE PLAINS, N.Y. -- Hostess Brands Inc. will sell most of its bread brands and the Beefsteak brand at auction on Feb. 28.
Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York in White Plains, N.Y., gave permission for the Irving, Texas-based company to move ahead with an auction. He also approved bidding procedures and an $11.7-million breakup fee that Flowers Foods Inc. will receive if it does not come out the winner, according to Bloomberg.
As CSNews Online previously reported, Thomasville, Ga.-based Flowers Foods inked two purchase agreements as a "stalking horse bidder" for certain Hostess Brands assets. One pact calls for it to purchase the Wonder, Nature's Pride, Merita, Home Pride and Butternut bread brands, 20 bakeries and approximately 38 depots for $360 million. The other deal includes the purchase of the Beefsteak brand for $30 million.
Flowers Foods is the second-largest producer and marketer of packaged bakery foods for retail and foodservice customers in the United States. It operates 44 bakeries. Among its top brands are Tastykake and Nature's Own.
Hostess Brands is also inching closer to selling its Drake's cake business as part of its bankruptcy reorganization, according to Reuters. Heather Lennox, an attorney for Hostess, told the court on Friday that Hostess was in advanced discussions with a number of parties for the remainder of its snack business, which includes Twinkies, a spokesman for Hostess told the news outlet.
Lennox also told the court that Hostess expects to file an agreement for the other brands in the near term, according to spokesman Thomas Becker.
It was not immediately clear who the agreements would be with, but private equity firm C. Dean Metropoulos has reportedly said recently it was working on a deal for some Hostess brands.
"We continue to be very engaged in the bidding process," Daren Metropoulos, a principal at the firm, which also owns Pabst Brewing Co, confirmed in an email to Reuters. "We are working to get a deal done."