Hostess Brands has entered into a definitive agreement to sell its Superior Cake Products in-store bakery business to Sara Lee Frozen Bakery for $65 million in cash, subject to post-closing adjustments. It is expected that the transaction will be finalized during the third quarter of this year, subject to customary closing conditions.
Southbridge, Massachusetts-based Superior has been a baked goods manufacturer for more than a century, producing a range of products including Éclairs, Madeleines, Brownie Bites, Black and White Cookies and other offerings sold under the Superior on Main brand name. In 2016, Hostess acquired the company for approximately $51 million and grew the business from $33 million of net revenue and $5 million of EBITDA for the twelve months prior to acquisition to approximately $43 million of net revenue and $7 million of EBITDA for the twelve months ended April 30, 2019.
Kansas City, Missouri-headquartered Hostess intends to use the net proceeds from the Superior sale to pursue a range of options, including reinvesting in its business, balance sheet de-leveraging and potential strategic acquisitions.
Andy Callahan, president and chief executive officer of Hostess, stated: “Superior has been a high performing business and we believe that it will continue to thrive in Sara Lee Frozen Bakery’s portfolio as we focus our future investments on areas of our business that better leverage our core competencies and pillars for growth.”
The history of Hostess Brands as a manufacturer, distributor and marketer of baked sweet goods in the United States dates back to 1919, when the Hostess CupCake was introduced, That was followed by the debut of Twinkies in 1930. Today the company produces a variety of new and classic treats including Donettes, Ding Dongs, Zingers, Danishes, Honey Buns and Coffee Cakes.
“We are thrilled to add Superior to our portfolio of established and iconic brands,” said Craig Bahner, chief executive officer of Oakbrook Terrace, Illinois-headquartered Sara Lee Frozen Bakery. “This acquisition accelerates a strategic goal of expanding our presence in the high-growth in-store bakery category.”
Sara Lee makes frozen bakery and dessert products including cakes, pies, waffles, pancakes sold throughout North America and elsewhere under the Chef Pierre, Bistro Collection and Van’s brand names in addition the Sara Lee label. It has production plants in Michigan and North Carolina, and recently opened a 10,000‐square‐foot R&D innovation center and test kitchen in suburban Chicago.