Rosalyn and Blair Hyslop. Image: submitted
Blair and Rosalyn Hyslop, co-owners and co-CEOs of Mrs. Dunster’s, announced Tuesday they were told their planned acquisition of Vermont-based Koffee Cup Bakery will not move forward.
In a shared statement, the Hyslops say they were shocked to learn over the weekend, before they were able to sign what was essentially a finalized agreement on Monday, that the receiver negotiated the sale of Koffee Cup Bakery to Georgia-based company Flowers Foods & Subsidiaries.
Koffee Cup’s assets would have been the first products sold under the Hyslops’ new company, The North Atlantic Baking Company. They announced the deal publicly two weeks ago after being named the successful bidders.
“We went through a fair and clearly set process and there is a fiduciary responsibility to follow the fair process,” said Blair Hyslop in an interview with Huddle. “Once the auctioneer’s gavel comes down, somebody shouldn’t be able to go back to the auctioneer and say, ‘Hey, wait, what did he pay? I’ll pay more.’ At the end of the day, that feels to us like that’s what happened here.”
Hyslop says he is particularly gutted to see the over 200 employees of the Koffee Cup Bakery remain out of work. North Atlantic Baking Company’s plan was to begin operations on Tuesday, June 8, and had been working to be ready to meet that date with workers lined up, insurance acquired, and operations ready to go.
“The impact that it had on the employees and the communities that were involved, I mean, they’re really the losers in this game that’s been played,” he said. “We feel that for the workers and for those communities.”
Along with the Koffee Kup and Vermont Bread Company brands with products sold in stores across New England, the acquisition would have included three bakeries: the Koffee Kup Bakery in Burlington, Vermont; The Vermont Bread Company in Brattleboro, Vermont; and The Superior Bakery in North Grosvenordale, Connecticut. The Hyslops were planning on selling the Connecticut-based bakery to a third party.
In a news release, Flowers Foods & Subsidiaries say they have no immediate plans to reopen any of the three bakeries they have acquired and the future of the Koffee Cup and Vermont Bread Company brands are unclear.
“The Koffee Kup and Vermont Bread Company brands have a strong consumer following in the region and we’ll be evaluating their role within our brand portfolio,” CEO and President Ryals McMullian said in the release. “We have no immediate plans to reopen the bakeries but will be assessing how they may fit our strategic network optimization efforts in the future.”
Flowers Foods is one of the largest producers of packaged bakery foods in the United States. They own brands such as Wonder, Nature’s Own, and Mrs. Freshley’s.
In an email to Huddle, Paul Baltzer, Vice President of Communications, says Flowers Foods was involved in discussions to acquire Koffee Cup in April of this year before the company entered receivership.
“Flowers was involved in good-faith discussions concerning the purchase of the assets of Koffee Kup Bakery since April of this year with the owner at that time. We had signed an NDA and were waiting to hear back regarding our interest in the assets,” Baltzer wrote.
“When it was announced that there was a preferred buyer, we were surprised – and realized the process had started moving forward without consideration of our interest. So, we immediately contacted the court-appointed receiver to ensure our offer was considered.”
However, Hyslop says the court-mandated process, which saw the receivership ask for bids, had a deadline of May 12. On May 15, Hyslop says they were named the successful bidder after a weekend of negotiations. He also says sworn court statements show the receiver stating the Hyslops’ offer was the highest bid.
“If they had gone through the process and then beat us in a fair process, we wouldn’t be arguing or have any beef,” he said. “We would be graciously exiting the stage.”
Hyslop says they had been working closely with receivership and the banks to get the operation up and running and saw the sudden new deal with Flowers as a complete blindside.
“I would argue there was no good faith,” Hyslop said. “We were working in good faith. We were working with the receiver to get propane hooked up so we could clean the equipment and start making things on Tuesday. That’s good faith. To be blindsided like this is shocking.”
Hyslop says at this moment, it is too soon to say what the future of the North Atlantic Baking Company looks like, although he says the New England market is still appealing to them.
Ultimately, he sees the end of their deal as another example of larger companies continuing their growth at the expense of regional players.
“We’re seeing the disappearance of family-owned regional businesses across North America. It’s a concerning trend and it’s one of the reasons I think so many people have been excited by our success. They see that these things are important.”
Huddle has reached out to Ronald Teplitsky, the receiver, for comment.
Liam Floyd is a reporter with Huddle, an Acadia Broadcasting content partner.
