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Little Debbie maker picked as lead bidder by Hostess

Hostess has picked the maker of Little Debbie as the lead bidder to buy its Drake's cakes.

According to a filing in U.S. bankruptcy court, McKee Foods has offered $27.5 million in cash for the cake brands, which include Devil Dogs, Funny Bones and Yodels. The fate of Twinkies and other Hostess cakes is still being negotiated with other bidders.

The bid by McKee would set the floor for an auction process that lets competitors make better offers. A judge would have to approve the final sale.

McKee Foods, based in Collegedale, Tenn., makes a variety of snack cakes under the Little Debbie banner that compete with Hostess cakes at a lower price.

Hostess Brands Inc., based in Irving, Texas, announced in November that it was shutting down its business and selling its breads and snack cakes.

Earlier this month, Hostess picked Flowers Foods as the lead bidder for six of its major bread brands, including Wonder.

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