McKee Foods secures Drake’s portfolio as Hostess cancels auction

By Elaine WATSON

- Last updated on GMT

Related tags Hostess brands

McKee Foods secures Drake’s portfolio as Hostess cancels auction
It’s too early to say when Devil Dogs and Ring Dings will be back on shelves, but they - and other brands in the Drake’s snack cake portfolio - will likely be produced in plants in Collegedale, Tennessee and Stuarts Draft, Virginia, says new owner McKee Foods.

McKee Foods corporate communications manager Mike Gloekler was speaking to FoodNavigator-USA after Hostess Brands canceled an auction scheduled for today for its Drake’s snack-cake business, given that McKee made the only qualified bid.

It’s going to take a few weeks before we get the recipes  

McKee’s $27.5m offer for the Devil Dogs, Ring Dings, Yodels, Yankee Doodles, Sunny Doodles, Funny Bones and Drake’s Coffee Cake brands and certain equipment was the only one on the table, said Gloekler.

“We plan to transfer the equipment from the former Hostess facilities in New Jersey to our plants at Collegedale, Tennessee and Stuarts Draft, Virginia, which are closest to the target markets for these products. However, we can’t give an indication yet of how soon we hope to start production.

“It’s going to take a few weeks before we even get the intellectual property - recipes and so on - acquired under the deal.”


Meanwhile, nothing will change hands until at least April 9, when Hostess will seek approval from the US Bankruptcy court in White Plains New York for the deal, he added.

Asked why McKee had bought the brands, he said: "These brands have a loyal following in the New York and New Jersey area, and our initial focus will be bringing them back to these markets. But we believe that we can expand distribution much further and we have the resources and the experience to make that happen."

Hostess said: “The stalking horse bid submitted by McKee Foods Corporation for the Drake’s snack cake brand will be the bid presented for approval to the U.S. Bankruptcy Court as no other qualified bids were received for those assets.”

Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s up for auction today

The only remaining bids for other parts of the Hostess empire still on the table are for the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands, plus four bakeries and 14 depots.

United States Bakery - which has offered $28.9m for these brands and assets - has been selected as the stalking horse bidder, but as other qualified bids have been submitted, an auction will take place today, confirmed Hostess.

Earlier this week, Hostess canceled a planned March 13 auction for most of its snack business, including Twinkies, after announcing that a $410m bid from investment firms Apollo Global Management and C. Dean Metropoulos & Co. was the only qualified offer.

Meanwhile, Grupo Bimbo SAB won a Feb. 28 auction to buy the Beefsteak bread brand, beating an initial bid by Flowers Foods with a $31.9m offer.

However, Flowers’ $360m bid for the majority of Hostess’s bread-making business, including its Wonder brand, was not challenged, and a planned auction was canceled.

Hostess Brands will seek Court approval for the above three deals on March 19.

Privately-held and family-run, Tennessee-based McKee Foods employs than 6,000 staff, and generates annual sales in excess of $1bn from plants in Gentry, AR; Chattanooga and Collegedale, TN; and Stuarts Draft, VA;, plus warehousing and distribution facilities in Kingman, AZ.

Best-known for its Little Debbie snack cake brand, it also sells granola bars, fruit & grain bars, fruit flavored snacks and granola cereals under the Sunbelt brand; and granola under the Heartland brand produced by its subsidiary, Blue Planet Foods. Its Fieldstone Bakery business produces snacks and cereals for the foodservice market.

 The collapse of Hostess Brands

Hostess filed for a full shut down and sale of its assets last November​ after nationwide strikes from members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), who were angered by a pay-cutting deal enforced upon them as part of a recovery plan to help Hostess emerge from bankruptcy.

The liquidation led to the closure of 33 bakeries, 565 distribution centers, around 5,500 delivery routes, 570 bakery outlet stores across the US and 18,500 job losses

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