NEW YORK — Hostess announced today that it has picked the maker of Little Debbie as the lead bidder to buy its Drake's cakes.
Hostess chose former rival McKee Foods is the stalking horse bidder for the cakes, which include Devil Dogs, Funny Bones, and Yodels. The fate of Twinkies and other Hostess cakes are still being negotiated.
The bid by McKee will set off an auction process that lets competitors make better offers.
McKee Foods makes a variety of snack cakes under the Little Debbie banner that competed with Hostess cakes. For example, its Cloud Cakes resemble Twinkies and its Devil Cremes resemble Devil Dogs.
Hostess owns a bakery and depot in suburban Toledo. Hostess chose Flowers Foods Inc. this month as a potential buyer of its bread-related assets. The agreement between the two companies would include a $360 million cash payment, and it is subject to approval by a bankruptcy judge.
Hostess, the maker of Twinkies and other famed snack products, closed its operations in November after it couldn't resolve a contract dispute with its bakers' union. More than 18,000 employees lost their jobs as part of that move, including more than 250 in northwest Ohio.
Hostess also had a bakery in Defiance.