Leaders with bankrupt Hostess Brands announced Monday that Collegedale's McKee Foods Corporation has been selected as the stalking horse bidder for its Drake’s snack cake brand, as well as certain equipment.
“This represents an opportunity for McKee Foods to complement our product line in a very competitive snack cake industry,” Mike McKee, president and CEO of McKee Foods, said in a prepared statement. “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.”
Collegedale's McKee Foods has agreed to pay $27.5 million for Hostess Brands' Drake snack cakes, such as Ring Dings, Yodels, Devil Dogs, Yankee Doodles, Sunny Doodles and Drake’s Coffee Cake, as well as some equipment.
A stalking horse bidder is selected by a bankrupt company. It allows the bankrupt company to avoid low bids on assets.
So, McKee is setting the bar for other bids.
Other interested parties will be able to bid during a future auction process, but the bids must exceed the amount that McKee is offering, according to a news release from McKee.
Hostess leaders chose McKee's bid after Hostess' financial adviser conducted a bidding process that involved 171 interested parties. Eighty-eight of those signed confidentiality agreements, according to the news release.
In November, Hostess Brands, which makes products such as Twinkies, Ding Dongs and Wonder Bread, announced it was going out of business after a weeklong strike by members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, according to Food Product Design.