Bids for Hostess Brands now total $440 million

Hostess Brands, which hopes to net at least $1 billion for its brands, buildings and other assets, yesterday announced two bids for its cakes and bread business, which brought up the total offered so far to over $440 million.

McKee Foods Corp, widely known for its Little Debbie snack cakes, has emerged as the lead bidder for the Drake's snack cakes formerly made by the bankrupt Hostess.

McKee, based in Collegedale, Tennesse-based Mckee, has put  in a bid for $27.5 million, the best offer from a group of at least 10 bidders, according to Irving-based Hostess. The firm is privately held and family run.

According to Hostess, Portland, Oregon-based United States Bakery Inc, also known as Franz Family Bakery had agreed to pay $28.85 million for the Sweetheart, Eddy's, Standish Farms and Grandma Emilie's bread brands, four bakeries, 14 depots and some equipment.

The combined purchase price under the two new lead bids - called stalking horse bids was around $56.35 million and combined with previously announced bids of $390 million for 93 per cent of its bread lines, Irving-based Hostess now had bids that totaling over $440 million.

A stalking horse bid refers to an attempt to establish a floor price for deal, to attract higher bids for a business.