Little Debbie maker wants Drake's cakes

Hostess takes McKee Foods' $27.5 million bid as the snack cake favorite finds new life.

By Jason Notte Jan 29, 2013 6:24PM
Little Debbie Oatmeal Creme Pies and Nutty Bars® Wafer Bars (McKee Foods)
The Twinkie is still in snack food limbo, but Little Debbie's parent company is hungry for Hostess' Drake's cakes now.

McKee Foods has put in a $27.5 million bid for Drake's brands, including Devil Dogs, Funny Bones and Yodels. This is officially the most anyone not named Newman has put on the line for a Drake's cake in the brand's more than 120-year existence.

That's a lot of cash to spend on a product with limited Northeast appeal -- Drake's biggest pop culture moment came during its cameo in a "Seinfeld" episode back in 1992 -- but McKee is banking on Drake's and its consumer base of coffee-cake loving grandparents and Shop-Rite and QuikChek-shopping working stiffs to boost its $1.1 billion annual take. Little Debbie already accounts for $800 million of that with Hostess knockoffs like its Twinkie-style Cloud Cakes and thinly veiled Devil Dog knockoffs known as Devil Cremes.

None of those brands will go away, as Drake's sphere of snacking influence is about as large as 101.1 WCBS-FM's broadcast radius, but McKee plans to crank up production of Drake's products at its plant in Stuarts Draft, Va., immediately to get Ring Dings and Yankee Doodles back on Northeast shelves immediately. McKee took a pass on Drake's old bakery and equipment in Wayne, N.J., but production there may not be completely lost.

McKee Foods' bid opens up an auction process that lets competitors make better offers. A judge must approve the final sale, which Hostess said will happen by May 30. It's tough to blame Hostess for its haste, as it is relying largely on nostalgia to sell off the brands that remained in the wake of its company shutdown in November. Hostess admitted as much in a court filing Monday, noting that there was no advertising or marketing for Drake's brands.

"The longer Drake's products stay off the shelves, the more likely it is that consumers will begin to use competitors' products," the filing said.

Hostess' union workers insisted before the shutdown that the company's hands-off approach to marketing brands like Drake's got it into a mess in the first place. After multiple bankruptcies, management shakeups, labor disputes and now this shutdown, Hostess is now slicing up its brands and selling them to whoever will take them.

It recently named Tastykake-maker Flowers Foods (FLO) its lead bidder for six of its bread brands, including Wonder Bread and Home Pride, after it put $390 million on the table. United States Bakery, meanwhile, agreed to pay nearly $29 million for Hostess' remaining bread brands.

News reports Tuesday afternoon said Hostess has chosen two private equity firms, Apollo Global Management and C. Dean Metropoulos & Co., to be the lead bidder for Twinkies and other brands. That paves the way for a court-authorized auction, which may take place within weeks, The New York Times reported.

Hostess is giving potential buyers plenty to chew on in the interim. Getting Drake's cakes back in New York cabbies' and commuters' hands is a strong start.

More on moneyNOW

Jan 29, 2013 9:11PM

Saw someone else mention Cloud Cakes earlier from Little Debbie...They aren't too bad..

I've been a Twinkie conda-sewer(miss-spelt) purposely for over 60 years, thereabouts ?


A little less greasy, filling slightly different texture, little less sweetness...imo

The cake part...Is pretty damn close..

Not bad overall... 

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