Sara Lee to acquire Hostess Brands instore bakery business for US$65m

USA – Sara Lee Frozen Bakery, a Chicago headquarter leader in frozen bakery and dessert sector, has entered into an agreement with Hostess Brands to acquire Superior Cake Products in-store bakery business for US$65 million.

Hostess acquired the business in 2016 for US$51million and has progressively grown the unit from US$33 million in net revenues posted during the twelve months ending May 2016 to approximately US$43 million for the 12 months ended 30 April 2019.

Hostess expects to use proceeds from the transaction to pursue a range of strategic options, including reinvesting in its business, de-leveraging its balance sheet and pursuing potential strategic acquisitions.

The chief executive of Hostess, Andy Callahan said: “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.”

Superior produces a range of éclairs, brownies, cookies and madeleines under the Superior on Main brand name.

In May this year, Hostess revealed plans to relocate its main distribution center to Kansas City as it sought to improve cost efficiencies following a drop in first-quarter profits.

It expects to move the operations to Kansas when construction is completed in the first quarter of 2020 and estimated an annual lease cost of about US$2.3 million.

Craig Bahner, chief executive of Sara Lee Frozen Bakery, added: “We are thrilled to add Superior to our portfolio of established and iconic brands.

“This acquisition accelerates Sara Lee Frozen Bakery’s strategic goal of expanding our presence in the high-growth in-store bakery category.

“Along with our new colleagues at Superior, we will continue to innovate and deliver irresistible foods that meet retail customer and consumer demands for premium, ‘worth it’ indulgences.”

The transaction, which is subject to customary closing conditions, is expected to close during the third quarter, a report by Just-food reveals.

Sara Lee Frozen Bakery is a business formed last year following the sale of a clutch of brands owned by Tyson Foods to private-equity firm Kohlberg & Company.

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