US-based baking company Flower Foods has signed two agreements to acquire certain bakery assets of Hostess Brands. The value of the total deal is approximately $390m.
One of the agreements includes purchase of the Wonder, Nature's Pride, Merita, Home Pride and Butternut bread brands; 20 bakeries; and 38 depots for $360m and the other agreement includes the purchase of the Beefsteak brand for $30m.
The deals are subject to a bankruptcy process, which is being initiated by Hostess. If Flower Foods' bids are approved, the bids would then be subject to a auction process to be held soon. The company will complete the transactions shortly following court approval, if it is chosen as the winning bidder.
Flowers Foods chairman and chief executive officer George E. Deese said that this agreement is consistent with Flowers Foods' long-term growth objectives to reach significantly more of the US population with its fresh breads, buns, and rolls.
"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," Deese said.
Flowers Foods expects the transactions to be accretive to earnings in 2013. It plans to fund the transactions through a mix of available cash on hand and debt.
Flowers Foods, headquartered in Thomasville, Georgia, producer and marketer of packaged bakery foods for retail and foodservice customers in the US with annual sales of more than $3bn. It operates 44 bakeries that produce a wide range of bakery products under Nature's Own and Tastykake brands.