Hostess CEO Says Stalking-Horse Bids Total $858 MillionPhil Milford and Dawn McCarty
Hostess Brands Inc. Chief Executive Officer Greg Rayburn said initial or stalking-horse bids for assets of the bankrupt maker of Twinkies and Wonder bread now total $858 million, with about $100 million more for sale.
In an interview today with Betty Liu on Bloomberg Television’s “In the Loop,” Rayburn said he probably will leave the company after the auction process is completed.
“I would think I can step away” after April, he said. “The bulk of what you need to do is almost done, essentially. I expect to see a pretty active and robust process” starting with the minimum auction price, he said.
Hostess, based in Irving, Texas, yesterday announced that it had chosen a joint offer from Apollo Global Management LLC and C. Dean Metropoulos & Co. as the lead bid for Twinkies and other cake brands in a March auction.
Apollo and Metropoulos offered as much as $410 million for the Hostess snack-cake business, which also includes Dolly Madison brands, five bakeries and equipment. Leon Black’s Apollo, based in New York, managed $109.7 billion in assets as of Sept. 30. Metropoulos, based in Greenwich, Connecticut, is the private-equity firm that owns Pabst Brewing Co.
The $858 million amount is almost double officials’ 2011 estimated value of $450 million mentioned at a Nov. 29 court hearing. It’s lower than an estimate of about $1 billion given by a financial adviser, Joshua Scherer of Perella Weinberg Partners LP, at another November hearing.
Scherer said interest from 110 potential buyers was “fast and furious” and with so many possible buyers was “like drinking from a fire hose.” Hostess previously announced lead bidders for the majority of its bread brands as well as its Drake’s brand. Flowers Foods Inc., McKee Foods Corp. and United States Bakery Inc. are the so-called stalking-horse bidders, setting the standards others will have to beat.
Flowers, based in Thomasville, Georgia, made the lead bid for Hostess’s Wonder, Butternut, Home Pride, Merita and Nature’s Pride brands, 20 bread plants, 38 depots and other assets. Flowers offered $360 million, plus $30 million for the Beefsteak brand. An auction is set for Feb. 28.
Flowers, established in 1919, produces and markets packaged baked goods for retail and food-service customers. The company’s top brands are Nature’s Own and Tastykake.
McKee, maker of Little Debbie snacks, agreed to pay $27.5 million for Drake’s. United States Bakery offered to buy the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands, four bakeries and 14 depots, plus certain equipment, for $28.9 million, according to court papers. Hostess has requested a March 15 auction date for Drake’s and the four bread brands.
Hostess, founded in 1930, is liquidating its brands, recipes, plants and other assets after failing to reach an agreement with striking bakers on concessions to help the company emerge from its second bankruptcy.
The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represented more than 5,000 Hostess workers, went on strike in November after the company imposed contract concessions approved by U.S. Bankruptcy Judge Robert Drain in White Plains, New York.
The union blamed management for failing to modernize and said it accepted big wage and benefit cuts as part of Hostess’s first bankruptcy, which ended in 2009. Hostess entered bankruptcy again in January 2012 after changes in American diets curbed sales while ingredient costs and labor expenses climbed.
The fates of the 18,000 people who lost their jobs are up in the air.
“Some bidders are union shops and they rehire people and that would be great,” Rayburn said in an interview on CNBC today. “I would love for everyone to get their job back,” Rayburn added.
The bakers’ union “looks forward to the opportunity to work together productively; and is now engaging with bidders who recognize the value that we can bring to an ongoing business,” David Durkee, the union president, said in an e-mailed statement.
The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).