Hostess To Sell Drake's Cakes To McKee Foods

NEW YORK -- Hostess is moving forward with the sale of Devil Dogs, Yankee Doodles and Yodels to the maker of Little Debbie cakes.

The bankrupt company says it picked McKee Foods as the buyer for the Drake's cakes after nobody stepped forward with a qualifying bid to top its $27.5 million offer.

The auction scheduled for Friday will be canceled as a result, according to a filing in bankruptcy court. A hearing to approve the sale is scheduled for April 9.

McKee Foods, based in Collegedale, Tenn., isn't projecting when it plans to have the cakes back on shelves.

"McKee Foods is a family-owned bakery, similar to how Drake's was established as a family bakery 125 years ago," CEO Mike McKee noted in a statement. "We have generations of experience in baking, and we will strive to bake the Drake's cakes, not just for taste and quality, but also to deliver on the memories of the loyal Drake's fans."

Separately, Metropoulos & Co., which is teaming up with Apollo Global Management to buy Twinkies and other Hostess cakes such as CupCakes, Ding Dongs and Ho Hos, said it hopes to have the cakes back on shelves by this summer. Metropoulos owns Pabst beer. Apollo's investments include fast-food chains Carl's Jr. and Hardee's.

A source who requested anonymity because the sale process is private had said the pair of investment firms had expressed interest in Drake's as well but that the offer ultimately did not qualify.

Hostess Brands Inc. had also canceled auctions for Twinkies and its major breads after nobody stepped forward with competitive offers for those brands. Flowers Foods was picked as the buyer for the breads, including Wonder. Grupo Bimbo, which makes Thomas' English muffins, was picked to buy its Beefsteak bread. A hearing to approve those sales is set for March 19.

The company plans to go ahead with an auction for its Sweetheart, Eddy's, Standish Farms and Grandma Emilie's breads on March 15. United States Bakery was chosen as the lead bidder for those brands for $30 million. That includes four bakeries and other equipment.

Hostess shuttered its factories in late November following a strike by its second biggest union. The company had been struggling financially for years.

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Hostess Union Hires Investment Bank To Represent Workers As Company Sells Off Iconic Brands

NEW YORK -- The pension fund for one of Hostess Brands' unions has hired an investment bank to represent workers and pensioners as the maker of Twinkies and Wonder Bread sells off its brands.

In a statement posted Sunday on its website, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents around 6,000 Hostess bakers, said Gordian Group LLC will represent the fund.

Gordian, a New York investment banking firm that specializes in distressed cases, has represented unionized workers at American Airlines, which is undergoing restructuring in bankruptcy. It's also an adviser in the ongoing liquidation of disgraced investor Bernard Madoff's firm.

Earlier this month, Irving, Texas-based Hostess selected Flowers Foods Inc. to buy its six bread brands, including Wonder Bread, along with 20 bakeries and 38 depots, for $390 million.

Flowers Foods, based in Thomasville, Ga., was selected as the stalking horse bidder for the bread brands. That means higher competing bids can still be made and the final deal must be approved in bankruptcy court.

Hostess is expected to find buyers for its dessert cakes, which include its iconic Twinkies and Ding Dongs, along with the Drake's Cakes and Dolly Madison brands, in the coming weeks.

Gordian President Peter Kaufman said his company will try to ensure that potential buyers hire former Hostess workers and honor Hostess' pension obligations.

"Given the sale process that is under way, we believe the bakers working with a buyer create the opportunity to increase value and are pivotal to the success of the business," Kaufman said in a statement. "Buyers should know that the Bakers are very interested in having direct discussions with them."

The Bakery and Confectionery Union and Industry International Pension Fund pays out $42 million in benefits per month to 52,000 pensioners, according to its website.

Hostess filed for bankruptcy protection in January 2012 after years of management turmoil and turnover. A bankruptcy judge approved its plan to liquidate its assets in November after it failed to reach a new contract agreement with the bakers' union.

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