KANSAS CITY, Mo. — Hostess Brands has entered into a definitive agreement to sell its Superior Cake Products bakery business to Sara Lee Frozen Bakery.
The $65 million deal, expected to close during the third quarter, includes products such as Superior’s Eclairs, Madeleines, Brownie Bites and Black and White Cookies. Hostess expects to use the net proceeds from the sale to pursue a range of potential strategic options, including reinvesting in its business, deleveraging its balance sheet and pursuing potential acquisitions.
“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,” said Andy Callahan, president and CEO of Hostess. “I would like to thank the Superior team for their contributions to the company and wish them continued success as they move forward under new ownership.”
Hostess acquired Superior Cake Products in 2016 for about $51 million. It was the first acquisition since the Hostess brand had returned to the market under new ownership in 2013. Hostess grew the business from about $33 million of net revenue and $5 million of EBITDA for the 12 months prior to the acquisition to about $43 million of net revenue and $7 million of EBITDA for the 12 months that ended in April 2019, according to the company.
“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.”
Oakbrook Terrace, Ill.-based Sara Lee Frozen Bakery is a leading maker of frozen bakery and dessert products. The company’s brands include Van’s, Chef Pierre and Bistro Collection.
Kansas City, Mo.-based Hostess is a leading packaged food company focused on manufacturing and selling fresh baked sweet goods in the United States. The brand dates back to 1919 and includes Twinkies, Donettes, Zingers, Honey Buns and Coffee Cakes.