Flowers Foods has made a bid to buy 20 bakeries and 38 depots from bankrupt Hostess Brands, though the St. Louis bakery was not included in the deal.
The Boonville, Mo., and Peoria, Ill., facilities were among those bakeries proposed for sale to Flowers, according to court filings.
Flowers, best known for its Tastykakes dessert cakes, said Friday it would pay $360 million to buy the Wonder, Nature’s Pride, Merita, Home Pride and Butternut bread brands, along with the plants and depots. Flowers offered another $30 million for the Beefsteak brand.
Flowers, based in Thomasville, Ga., is the nation’s second largest maker of packaged bakery products for retail and food service customers. In addition to Tastykakes, the company also makes breads including Nature’s Own and Cobblestone Mill.
Bill Millecker, vice president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Local 4 in St. Louis, said he had heard rumors of Flowers’ interest but didn’t know any details about the proposed sale.
Millecker declined to comment until he got confirmation of the deal. The union represents 200 of the 365 employees at the now-closed facility, which made Wonder and Hostess brand products.
Hostess, based in Irving, Texas, agreed to make Flowers the “stalking horse” bidder, which is a bidder that sets the minimum bid. That means higher competing bids can still be made, and the final deal must be approved in bankruptcy court.
If the bankruptcy court approves the stalking horse bid, the properties would then be put up for auction on Feb. 28 with other bidders invited.
In a court document, the company said its investment adviser, Perella Weinberg Partners, contacted 171 parties about the Hostess business. Eventually, the firm took 13 bids for the bread business before determining that Flower’s offer was the best.
Flowers Chief Executive George Deese said the purchase was part of the company’s goal to reach more customers with bread, buns and rolls.
Taken together, Hostess said the bread brands being sold generated just under $1 billion in sales last year, with Wonder bread accounting for about half of that. Flower Foods, which generates about $3 billion in annual sales, said it expected the deals to be accretive to its earning this year. The company plans to finance the deal through a mix of cash and debt.
The demise of Hostess came after years of management turmoil and turnover, with workers saying the company failed to invest in its brands. Hostess filed for its second Chapter 11 bankruptcy in less than a decade in January 2012, citing costs associated with its unionized workforce. It had about 18,500 employees when it announced that it was shutting down after it was unable to reach a deal on a new contract with striking bakers.
Hostess is expected to announce buyers for its famed dessert cakes, including Twinkies and Ding Dongs, over the next several weeks. The company has said it has received interest for its brands from a wide variety of parties, including national supermarket chains and the makers of brand name packaged foods.