Hostess Brands offloads Superior Cake Products business for $65m

Hostess Brands has entered into an agreement to sell its Superior Cake Products in-store bakery business to Sara Lee Frozen Bakery for $65 million.

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

In 2016, Hostess acquired Superior 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 in May 2016, to approximately $43 million of net revenue and $7 million of EBITDA for the 12 months ended 30 April 2019.

The company 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.

Hostess CEO 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.”

Craig Bahner, CEO 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.”

Last year, Sara Lee Frozen Bakery was sold by Tyson Foods to private equity firm Kohlberg & Company.