A spurned bidder is dropping its legal fight to stop the surprise last-minute sale of the recently closed Koffee Kup Bakery and its subsidiary, Vermont Bread Co., to Georgia-based Flowers Foods, the $4 billion maker of such national brands as Wonder Bread.
East Baking Company of Massachusetts has publicly questioned whether a sale to Flowers Foods — self-described as “one of the largest producers of packaged bakery foods in the United States” — would violate the federal Clayton Act, which prohibits mergers and acquisitions that “may be substantially to lessen competition,” and the Sherman Antitrust Act against monopolies.
But after consulting with lawyers, the Bay State company no longer will contest the sale in court.
“We’ve decided to pull back,” East Baking spokesman Jeff McCarroll said Monday. “We didn’t see a path forward through litigating.”
Some 150 Koffee Kup workers in Burlington and 100 Vermont Bread workers in Brattleboro were surprised April 26 to find their manufacturing and distribution plants abruptly shuttered without explanation, leading a Chittenden County Superior Court judge to appoint receiver Ronald Teplitsky of New York’s Next Point LLC to sell the assets.
Amid several bidders, East Baking sprang to the public forefront May 6 when it requested and received initial state authorization for up to $2.4 million in Vermont Employment Growth Incentive money to restart the plants.
Three weeks later, Atlantic Canada’s largest family-owned bakery, Mrs. Dunster’s, went on to reap up to $1.8 million through the same program May 27, just hours before it announced it was the receiver’s “preferred purchaser.”
But both companies were surprised June 7 when the receiver changed his mind and instead awarded the Vermont bakeries to Flowers Foods, whose brands also include Sunbeam and Tastykake.
The receiver and his lawyer have yet to respond to VTDigger requests for comment. But Flowers Foods has issued a press release saying that, even with a “strong consumer following in the region,” it has “no immediate plans to reopen” either the Burlington or Brattleboro plants.
That response has sparked ire from customers with dreams of Koffee Kup and Vermont Bread rehiring workers and returning local baked goods to store shelves.
Mrs. Dunster’s has yet to report its next course of action.
A lawyer for Koffee Kup, for its part, has filed an emergency motion seeking the immediate disclosure of sealed information.
“The Koffee Kup Entities cannot engage in meaningful discussions regarding the distribution of any surplus proceeds without first knowing and fully understanding the terms and conditions of the sale,” Burlington lawyer Alexandra Edelman wrote in her motion.
“The receiver, as an officer appointed by and subject to the control of the court, does not have the authority to keep the sale information confidential,” Edelman continued. “Rather, the receiver is required to provide transparency.”