Jan. 23 (Bloomberg) -- C. Dean Metropoulos & Co. said it plans to bid for the cakes business of bankrupt Twinkies maker Hostess Brands Inc. with Apollo Global Management.
“We continue to be very engaged in the bidding process,” Daren Metropoulos, a principal at the private-equity firm that owns Pabst Brewing Co., said in an e-mail. “We are working diligently to get a deal done.”
The cake brands of the 82-year-old maker of Ding Dongs, Ho Hos and Drake’s Devil Dogs drew multiple bidders, Hostess lawyers said at a December court hearing. Potential buyers separately were interested in other Hostess products or manufacturing plants, said Heather Lennox, an attorney for the Irving, Texas-based baker.
Hostess began to wind down operations in November after failing to reach an agreement with its striking bakers’ union on concessions to help it emerge from its second bankruptcy. Changes in American diets led to years of declining sales while ingredient costs and labor expenses climbed.
“It would be a tremendous opportunity to resurrect these legendary brands and bring them back to the consumer,” Metropoulos said.
Tom Becker, a Hostess spokesman, declined to comment on a possible bid from Metropoulos and Apollo. The Wall Street Journal earlier reported the planned bid by the two private-equity firms.
A standoff with striking union workers triggered liquidation auctions of Hostess’s brands, recipes, plants and other assets.
The Bakery Confectionery Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after U.S. Bankruptcy Judge Robert Drain in White Plains, New York, imposed contract concessions opposed by more than 90 percent of the union’s members. The union represents more than 5,000 Hostess workers.
The maker of Wonder bread and Hostess CupCakes emerged from an earlier bankruptcy in 2009 under the control of the buyout firm Ripplewood Holdings LLC and lenders. The company, previously known as Interstate Bakeries Corp., changed its name to Hostess Brands in October of that year. Hostess entered bankruptcy again in January 2012.
Hostess announced in a Jan. 11 statement that Flowers Foods Inc. is the lead bidder for most of the assets of its bread-baking operations. Under the accord, Flowers will receive a break-up fee of $12.6 million for the bread brands and $1.05 million for the Beefsteak brand if it’s outbid at auction.
A committee representing unsecured creditors objected to the break-up fee saying it was “excessive and should be reduced” in court papers filed yesterday in New York.
The committee suggested a $10 million fee for the bread brands and $810,000 fee for Beefsteak, saying it would result in “$2.84 million in savings to the estates, while still more than adequately compensating Flowers, and should also result in a more competitive bidding process.”
Flowers Foods, based in Thomasville, Georgia, also agreed to serve as the lead, or stalking-horse, bidder for the company’s Beefsteak bread brand for $30 million. The accord doesn’t include facilities or additional assets, according to the statement.
Flowers Foods, established in 1919, produces and markets packaged bakery foods for its retail and food-service customers. The company’s top brands are Nature’s Own and Tastykake.
The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04-45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).