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Hostess Wins Approval of Auction for Twinkies, Drakes Brands (1)

Feb. 11 (Bloomberg) -- Hostess Brands Inc. won bankruptcy court approval to hold auctions for brands including Wonder bread, Twinkies and Drake’s.

U.S. Bankruptcy Judge Robert Drain today in White Plains, New York, approved Flowers Foods Inc., McKee Foods Corp., United States Bakery Inc., Apollo Global Management LLC and C. Dean Metropoulos & Co. as the so-called stalking-horse, or lead, bidders for most of Hostess’s cake and bread brands, setting the thresholds other suitors will have to exceed. A sale hearing is set for March 19.

Apollo and Metropoulos offered as much as $410 million for the Hostess snack-cake business, which includes Dolly Madison brands, five bakeries and equipment. Leon Black’s Apollo, based in New York, managed $109.7 billion in assets as of Sept. 30. Metropoulos, based in Greenwich, Connecticut, is the private- equity firm that owns Pabst Brewing Co.

Flowers, based in Thomasville, Georgia, made the lead bid for Hostess’s Wonder, Butternut, Home Pride, Merita and Nature’s Pride brands, 20 bread plants, 38 depots and other assets. Flowers offered $360 million, plus $30 million for the Beefsteak brand. An auction is set for Feb. 28.

Flowers, established in 1919, produces and markets packaged baked goods for retail and food-service customers. The company’s top brands are Nature’s Own and Tastykake.

McKee Offer

McKee, maker of Little Debbie snacks, agreed to pay $27.5 million for Drake’s. United States Bakery offered to buy the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands, four bakeries and 14 depots, plus certain equipment, for $28.9 million. A March 15 auction date for Drake’s and the four bread brands has been set.

Hostess, founded in 1930, is liquidating after failing to reach an agreement with striking bakers on concessions to help the company emerge from its second bankruptcy.

Previously known as Interstate Bakeries Corp., Hostess left an earlier bankruptcy in 2009 under the control of buyout firm Ripplewood Holdings LLC and lenders. The company, based in Irving, Texas, entered bankruptcy again in January 2012.

The case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains).

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