McKee Foods Wins $27.5 Million Bid for Drakes Snack Cakes

by Judie Bizzozero, Senior Editor

COLLEGEDALE, Tenn.Hostess Brands, Inc., accepted a stalking horse bid of $27.5 million from McKee Foods Corp. for its Drakes snack cake brand that includes Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles and Drakes Coffee Cake. The bid will be presented for approval to the U.S. Bankruptcy Court for the Southern District of New York on April 9.

We know that Drakes Cakes are unique baked goods that have a loyal following," said Mike McKee, president and CEO. McKee Foods is a family-owned bakery, and similarly Drakes was established as a family bakery 125 years ago. We have generations of experience in baking, and we will strive to bake the Drakes cakes, not just for taste and quality, but also to deliver on the memories of the loyal Drakes fans."

McKee Foods offers more than 90 varieties of Little Debbie® and 32 varieties of Sunbelt® Bakery snacks and cereals that are sold in all 50 states, Canada and Puerto Rico. McKee Foods also owns the Collegedale-based subsidiaries Blue Planet Foods, manufacturer of high-quality granola products, including Heartland® cereals and pie shells, and Fieldstone Bakery, which provides institutional foodservice organizations with nutritious, high-quality snacks and cereals.

On Nov. 16, 2012, Hostess Brands filed a motion in U.S. Bankruptcy Court to shutter its operations and liquidate its assets as a result of a weeklong strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) International Union. On Nov. 21, 2012, the U.S. Bankruptcy Court for the Southern District of New York approved Hostess Brands emergency interim motion for the orderly wind down of its business and sale of its assets after the company and BCTGM were unable to reach an agreement during an 11th-hour mediation.

The shuttering of Hostess business operations resulted in the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs. Hostess Brands said it would sell its popular brands, including Hostess®, Drakes® and Dolly Madison®, which make iconic cake products such as Twinkies®, CupCakes, Ding Dongs®, Ho Hos®, Sno Balls® and Donettes®. Bread brands to be sold include Wonder®, Natures Pride®, Merita®, Home Pride®, Butternut® and Beefsteak®, among others.

On March 13, Hostess Brands accepted a stalking horse bid of $410 million from investment firms Apollo Global Management LLC and Metropoulos & Co. for the majority of its snack cake business that includes Hostess® and Dolly Madison® branded products.

On Feb. 28, Flowers Foods, Inc., won its $360 million stalking horse bid for the majority of Hostess Brands bread business assets, including Wonder, Nature's Pride, Merita, Home Pride and Butternut bread brands; 20 bakeries; and approximately 38 depots. In a separate deal, Grupo Bimbo, S.A.B. de C.V. was selected as the winning bidder for the assets related to the Hostess Beefsteak bread business. Grupo Bimbo agreed to pay $31.9 million for the Beefsteak assets. The court also will consider approval of these brands at the same March 19 hearing for the Hostess® and Dolly Madison® brands.