Hostess Brands, Inc. (“Hostess” or “Company”) (NASDAQ: TWNK) (NASDAQ: TWNKW) has announced that it has entered into a definitive agreement to sell its Superior Cake Products, Inc. (“Superior”) in-store bakery business to Sara Lee Frozen Bakery for a purchase price of $65 million in cash, subject to post-closing adjustments. The transaction is expected to close during the third quarter, subject to customary closing conditions. The Company expects to use the net proceeds from the transaction to pursue a range of potential strategic options, including reinvesting in its business, de-leveraging its balance sheet and pursuing potential strategic acquisitions, while effectively managing its capital structure.

Andy Callahan, president and chief executive officer of Hostess, 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. 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.”

Superior has been baking quality products for more than a century, producing 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. 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 twelve months ended April 30, 2019.1

“We are thrilled to add Superior to our portfolio of established and iconic brands,” said Craig Bahner, chief executive officer 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.”

TM Capital acted as financial advisor to Hostess.

The Company expects to report its second quarter 2019 financial results on August 7, 2019.