Hostess Brands has acquired the Big Texas and Cloverhill Bakery brands from Aryzta as well as its Chicago Cloverhill bakery facility.
The deal is a move by Hostess Brands to expand its offerings in the breakfast categories of sweet baked goods, such as Danish pastries and cinnamon rolls. Hostess said the 137,000 square-foot Chicago Cloverhill site “represents the largest individually-wrapped Danish pastry facility in North America”.
Cloverhill Bakery is a producer of baked goods that are mainly sold in vending machines and convenience retailers and was originally acquired by Aryzta in 2014. Big Texas is a brand of cinnamon rolls.
In a separate deal, Aryzta has sold its Cicero facility in Chicago to Bimbo Bakeries USA. Aryzta said in a statement: “These disposals are consistent with Aryzta’s commitment to address non-core or nonstrategic businesses and reflect a focus on maximising free cash flow.”
Aryzta is currently undergoing a €1 billion deleveraging programme that aims to re-focus the business towards profitability. Last week, it announced it expects its 2018 EBITDA to be around 15% lower than last year.
Speaking of the deal, Hostess CEO Bill Toler said: “This strategic acquisition allows us to bring important product manufacturing in-house as we expand and drive growth in our breakfast product portfolio.
“In addition, this purchase will enable Hostess to forgo in-house capital investments and create significant value over the next few years.”
Hostess COO Andy Jacobs added: “We have had a long supply relationship with Aryzta for our breakfast items and are eager to expand our growing breakfast offerings with these capabilities. In addition, the positioning and consumer loyalty to the Big Texas and Cloverhill brands will broaden our participation in a number of distribution outlets.
“This acquisition will enhance our competitive position as we have the opportunity to further build our branded distribution and market share in the breakfast category within sweet baked goods, as well as enhance new and existing retailer relationships, particularly in the complementary club and vending sales channels.”
© FoodBev Media Ltd 2019