As the bankruptcy auction process for units of Hostess Brands continues, Flowers Foods appears in pole position for an initial, binding bid for part of the company's bread unit, according to people familiar with the matter.
As many as six separate, binding bids—so-called "stalking horse" bids—for various Hostess units could be announced by the end of this week, these people said. If approved by a bankruptcy judge on Jan. 25, the bids would then set the baseline price for each unit at a more widely attended auction process in February. (Read More: The Fight to Buy Hostess: Main Street vs. Wall Street.)
Also circling Hostess assets is Mexico's Grupo Bimbo, which owns Sara Lee. While it remains unclear whether Grupo Bimbo will occupy one of the opening bid slots, sources said the company continues to eye seriously the snack cake portion of Hostess's business. The unit produces American snacks like Twinkies and Cupcakes under the Hostess name, and Ring Dings, Devil Dogs and Yodels under the Drake's umbrella.
A spokesperson for Grupo Bimbo declined to comment. A representative for Flowers Foods could not be reached. (Read More: At Hostess, Everything's for Sale but the Kitchen Sink.)
Flowers, the Thomasville, Ga.-based baker, currently operates bread brands like Nature's Own. Industry bankers said that Flowers—which tapped its credit line for excess cash in late 2012—would be a fitting suitor since it already has the infrastructure for daily delivery of bread products.
Customers of Hostess like Kroger and Wal-Mart are still in the bidding process, according to people familiar with the matter. Those parties, however, will be unlikely to participate until the in-court bidding begins next month. Both parties declined to comment. (Read More: How Hostess Failed: Hedge Funds vs. Unions.)
—By CNBC's Kayla Tausche; Follow her on Twitter: @KaylaTausche