Hostess Brands, Inc., announced that the finacially-ailing company has selected McKee Foods Corporation in Collegedale as "the stalking horse bidder" for its Drake’s snack cake brand and certain equipment.
As stalking horse bidder, McKee Foods sets the bar for bidding in a future auction process to be set by the bankruptcy court, officials said. Other interested parties will be able to bid at that time, but their bids would have to exceed the one made by McKee Foods.
Under the stalking horse agreement, McKee Foods Corporation has agreed to pay $27.5 million for the Drake’s brand and specific equipment.
Drake’s products include Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles and Drake’s Coffee Cake.
“This represents an opportunity for McKee Foods to complement our product line in a very competitive snack cake industry,” said Mike McKee, president and CEO of McKee Foods. “The Drake’s brand has its roots in a family baking business, much like McKee Foods and the Little Debbie brand. We believe that Drake’s will have a strong future within our family of brands.”
Hostess selected the McKee Foods Corporation bid after Perella Weinberg Partners, Hostess' financial advisor, conducted a bidding process that involved contacting 171 potentially interested parties, 88 of which signed confidentiality agreements.
Founded in 1934 by O.D. and Ruth McKee, McKee Foods Corporation has grown to become America’s leading family-owned snack cake bakery. McKee Foods offers more than 90 varieties of Little Debbie and 32 varieties of Sunbelt Bakery snacks and cereals are sold in all 50 states, Canada and Puerto Rico. The company is headquartered in Collegedale and has production facilities in Gentry, Ark., and Stuarts Draft, Va., and a warehouse and distribution center in Kingman, Ariz.
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 food service organizations with nutritious, high-quality snacks and cereals.