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Hostess latest: United States Bakery wins Sweetheart, Eddy’s, brands; Flowers to take brands to new areas

By Elaine WATSON , 20-Mar-2013
Last updated on 21-Mar-2013 at 14:22 GMT2013-03-21T14:22:13Z

United States Bakery has won the auction for the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s brands as part of the sell off of chunks of the Hostess Brands empire.

The court hearing to consider approval of the sale will be held on April 9.

USB Inc (better known as Franz Bakery) initially offered $28.85m for the brands, four bakeries (in Salt Lake City, UT; Billings, MT; Anchorage, AK; and Seattle, WA), and 14 depots, plus certain equipment, but was pushed up to $30.9m in the auction.

A spokesman for Franz Bakery said it was too early to say when the products would be back on shelves or how the firm planned to re-energize the brands.

However, it issued a statement from its president Marc Albers, who said: “We are excited about this new development in the bid process, but understand there’s a lot of work still left to be done".

The largest independent baking company in the Northwest

Based in Portland, Oregon, Franz Bakery is the largest independent baking company in the Northwest and claims to be the largest family-owned baking company in the Western United States.

Today the firm makes bread, buns, bagels, cookies, and pastries in seven baking facilities in the region, supplying grocery, restaurant, food service and institutional customers in Oregon, Washington, Idaho, Northern California and Montana.  

The sell-off process

All of the major brands in the Hostess stable have now been acquired, with investment firms Apollo Global Management and Metropoulos & Co securing Twinkies, Ding Dongs and other snack cake brands for $410m; Flowers Foods snapping up the Wonder, Nature's Pride, Merita, Home Pride, and Butternut bread brands for $360m; Grupo Bimbo securing the Beefsteak bread brand for $31.9m; and McKee Foods acquiring Ring Dings, Devil Dogs and other Drake's cake brands for $27.5m.

However, there are still some very small brands for which offers have not yet been submitted, including bread brands J.J. Nissen, Colombo and Cotton (which represent about 5% of Hostess' total bread sales).  

Flowers Foods: We plan to reintroduce Hostess bread brands through and outside our current service area

In a presentation to financial analysts at the New York Stock Exchange yesterday, Flowers Foods president Allen Shiver said: "We anticipate completing the transaction in the second half of the year. Because the transaction is not finalized and for competitive reasons, we will not share any specific plans regarding the pending acquisition."

But he added: "Once the transaction is completed, we plan to reintroduce Hostess bread brands through and outside our current service area. Over time, our plan has already continued expanding to parts of the country where we do not currently have distribution.

"As we do so, we expect to introduce Hostess bread brands to those new areas. As we told you earlier, our long-term growth strategy has been to expand methodically into new regions from our existing bakeries. As we enter new regions, we will build access to retail and foodservice customers in those new markets, we'll set up appropriate distribution systems, and we'll reopen bakeries as consumer demand for our products grow.

"As we continue to expand, this strategy will continue. We intend to expand into new regions from our current territories, growing sales and then add or reopen production capacities for that growth."

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