Hostess Brands Inc. is close to securing initial bids for its Drake’s cake business and four bread operations that could net the bankrupt bakery company more than $50 million, according to a source familiar with the matter. An announcement of the deals, part of the company’s bankruptcy reorganization, could come on Monday, according to the source, who requested anonymity because the talks are not public.

Collegedale, Tenn.-based McKee Foods, maker of Little Debbie snack cakes, is expected to offer roughly $27 million for Drake’s, which makes Devil Dogs, Ring Dings and Yodels, said the source, noting negotiations were ongoing so the final price could change

United States Bakery Inc., also known as Franz Family Bakery, is expected to bid about the same amount for Hostess bread brands, including Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s, according to the source.

Hostess and McKee declined to comment. An official at Franz, a fourth-generation, family-owned company based in Portland, Ore., was not immediately available

These “stalking horse bids” set baseline offers for the assets and are still subject to auctions.

Earlier this month, Hostess chose Flowers Foods Inc to start the bidding at $390 million for its bread brands including Wonder, Butternut, Home Pride, Merita and Nature's Pride.

Still outstanding is Hostess’ iconic Twinkies brand. The company's lawyer said last week that Hostess was in advanced discussions with a number of parties for the remainder of its snack business, including Twinkies.

Hostess received court permission to wind down its 82-year-old business in November after a strike by a bakery union crippled its operations. The company is liquidating all its assets.

Source: Reuters