US baker Flowers Foods has reached an agreement with Hostess Brands to acquire its Wonder, Nature's Pride, Merita, Home Pride and Butternut bread brands for around US$360m.
Flowers will also take on 20 of Hostess' bakeries and approximately 38 depots.
In a separate agreement, Flowers will also acquire the Beefstrak brand for $30m.
Hostess went into liquidation at the end of last year, blaming a national strike for "crippling" the already struggling company. The agreement is subject to court approval.
Flowers said the deal is expected to be accretive to 2013 earnings. The company added that the move was in line with its target of reaching more of the US population by expanding its relationship with new retail and foodservice customers.
Hostess added that its reamining bread and cake brands were still on the block.
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Flowers Foods Signs Agreements to Acquire Certain Hostess Bread Brands and Bakeries
THOMASVILLE, Ga., Jan. 11, 2013 /PRNewswire/ -- Flowers Foods, Inc. (NYSE: FLO) today announced it has signed two asset purchase agreements with Hostess Brands, Inc. as the "stalking horse bidder" for certain Hostess assets. One of the agreements provides for the purchase by Flowers of the Wonder, Nature's Pride, Merita, Home Pride and Butternut bread brands; 20 bakeries; and approximately 38 depots for a purchase price of $360 million. The other agreement provides for the purchase by Flowers of the Beefsteak brand for $30 million.
The transactions are subject to a court-approved bankruptcy process being initiated by Hostess. If Flowers' "stalking horse" bids are approved by the bankruptcy court, the bids would then be subject to a competitive auction process to be held several weeks from now. The company would expect to close the transactions shortly following court approval if it is selected as the winning bidder. The transactions also are subject to regulatory clearance.
Flowers Foods has previously stated its interest in acquiring certain Hostess assets should they become available. "This agreement is consistent with Flowers Foods' long-term growth objectives to reach significantly more of the U.S. population with its fresh breads, buns, and rolls," said George E. Deese, chairman and chief executive officer of Flowers Foods. "We believe these assets would enhance our ability, over time, to provide more U.S. consumers with quality baked foods at a good value through existing and new retail and foodservice customers."
Based on the current bid price, Flowers Foods would expect the transactions to be accretive to earnings in 2013. Flowers Foods plans to finance the transactions through a mix of available cash on hand and debt.