Aryzta US plant a bargain buy for owner of Twinkies
A manufacturing facility in the US offloaded by embattled Swiss-Irish baked goods firm Aryzta in a distressed sale earlier this year was acquired by Hostess Brands at less than its fair value.
Hostess Brands, whose products include the iconic Twinkies snack cake, paid an initial cash payment of $23.9m (€21.1m) for the Cloverhill facility in Chicago and the Big Texas and Cloverhill brands, it noted in recently-released financial results.
"Prior to the acquisition, the bakery facility encountered a significant labour-related business disruption," said Nasdaq-listed Hostess Brands.
It added: "Management considered that the seller was motivated to sell the facility and the related assets in a short time frame so that it could avoid future operating losses and use the proceeds to reduce debt and improve its balance sheet."
"The preliminary valuation of net assets acquired indicates the fair value may exceed the purchase price," added Hostess Brands.
It has not yet received a final valuation for the assets, it said. The deal included $8.1m paid for inventory and $16.8m for property and equipment.
"The company continues to work with its third-party valuation specialist to finalise the valuation of certain assets acquired and liabilities assumed," noted Hostess Brands.
Aryzta, whose brands include Cuisine de France, sold its Cloverhill facilities earlier this year as it struggled to cut debt and stabilise the group's overall operations.
In 2017, Aryzta's Cloverhill manufacturing facilities in Illinois were hit by an immigration crackdown that saw about a third of the facility's 2,400 workforce forced out.
That placed a huge strain on Aryzta's operations. The staff had been supplied to the Aryzta facilities by a third-party agency.
Aryzta was not aware that many of the staff supplied to it by the agency did not have proper work authorisation.
Aryzta sold a Cloverhill facility in Cicero, Illinois - west of Chicago city centre - to Bimbo Bakeries, the US unit of Mexico's Grupo Bimbo. The total proceeds for the sale of the two Cloverhill plants, as well as the brands, was €57m. Aryzta paid €530m for the sites in 2014.
Hostess Brands said the acquired Cloverhill facility and brands generated net revenue of $18.9m in the three months to the end of September, and an $8.9m loss.