Hostess sells in-store bakery business to focus on growth areas

Hostess sells in-store bakery business to focus on growth areas
Courtesy of Superior Cake Products

Hostess Brands, the US bakery business behind Twinkies, is selling its in-store bakery business to Sara Lee Frozen Bakery for $65 million.

The sale comes as Hostess looks to focus its investment efforts on areas of the business which, according to President and CEO Andy Callahan, “better leverage our core competencies and pillars for growth”.

Proceeds raised from the sale of Superior Cake Products will be reinvested into the business as well as de-leveraging its balance sheet and pursuing potential strategic acquisitions.

Hostess acquired Superior back in 2016 for $51 million. It grew the business from $33 million of net revenue to around $45 million in under three years.

The company, which dates back more than a century, produces a range of sweet goods including Éclairs, Madeleines, Brownie Bites, Black and White Cookies and other offerings made under the ‘Superior on Main; brand name.

“We are thrilled to add Superior to our portfolio of established and iconic brands,” said Craig Bahner, CEO of Sara Lee Frozen Bakery.

“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.”

Subject to post-closing adjustments, the all-cash deal is expected to close during Q3 2019.