3 Min Read
(Reuters) - Flowers Foods Inc FLO.N on Friday said it has agreed to buy Wonder and other well-known bread brands from Hostess Brands Inc for $390 million, as part of the latter company's bankruptcy reorganization.
The Thomasville, Georgia-based company said it agreed to pay $360 million for the Wonder, Butternut, Home Pride, Merita and Nature's Pride brands, as well as 20 bakeries and 38 depots.
It also entered a second contract where it agreed to pay $30 million for the Beefsteak brand.
Flowers already owns brands such as Cobblestone Mill, Nature's Own and Tastykake. It said it expects the purchases to add to earnings in 2013, and that it would finance them with cash on hand plus debt.
Gregory Rayburn, Hostess' chief executive, said the Irving, Texas-based company remains in talks to sell its snack cake business, including Twinkies and Drake's cakes, as well as its remaining bread brands.
The Flowers purchase is subject to higher bids at a court-supervised auction, and requires approval by regulators as well as U.S. Bankruptcy Judge Robert Drain in White Plains, New York.
Hostess will ask that the auction take place on February 28, with a hearing to authorize a sale on March 5.
In winning the right to serve as the initial bidder in the auction, Flowers beat out Grupo Bimbo SAB de CV (BIMBOA.MX), one of the world's largest bakers, whose U.S. brands include Entenmann's, Sara Lee and Thomas'.
Hostess said it chose the Flowers bids after its bankers at Perella Weinberg Partners ran a bidding process that drew 169 prospective buyers, including 87 that signed confidentiality agreements.
Grupo Bimbo representatives did not immediately respond to a request for comment.
Hostess in November decided to shut down its baking business and liquidate after a strike by its baker's union crippled the 82-year-old company.
One of Hostess' bankers, Joshua Scherer, told Drain at a November court hearing that the company's brands had drawn "furious" buyer interest, including from national retailers.
The case is In re: Hostess Brands Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-22052.
(The story corrects that Hostess based in Irving, Texas in paragraph five)
Reporting By Tom Hals in Wilmington, Delaware and Jonathan Stempel in New York; Editing by Gary Hill