Flowers Foods to acquire Tasty Baking
April 11, 2011
THOMASVILLE, GA. — Flowers Foods and Tasty Baking Co. have announced a merger agreement under which Flowers will acquire all outstanding shares of Tasty common stock for $4 per share. The transaction has a total purchase price of $165 million.
“We are very pleased with the addition of Tasty to Flowers,” said George E. Deese, chairman and chief executive officer of Flowers Foods. “Tasty brings a talented, committed team of employees, two highly efficient bakeries, the iconic Tastykake brand, a solid sales base and an effective distribution system. The merger will expand Flowers’ geographic reach and bring new consumers, new customers, and new opportunities for further growth. It will provide the opportunity to add Tastykake products to Flowers’ existing direct-store delivery network. With the addition of Tasty, our snack cake business will be significantly enhanced, and we will have a new platform to grow our Nature’s Own brand as we make other acquisitions that add needed production capacity for breads, buns and rolls.”
According to Flowers, the transaction is expected to strengthen its snack cake business through the addition of the Tastykake brand, expand Flowers’ geographic reach, immediately add more than 24 million consumers, add two baking plants with additional capacity to support growth, generate significant operating synergies through additional revenue and cost-saving opportunities, and add $115 million to $125 million to Flowers’ 2011 sales and $210 million to $225 million to Flowers’ 2012 sales. Flowers suggested the expansion could expand the reach of Flowers’ Nature’s Own brand through Tasty’s marketing areas.
Established in 1914, Tasty Baking is a baker and distributor of snack cakes, pies, cookies and donuts. It operates baking plants in Philadelphia, where it is headquartered, and in Oxford, Pa. The company spent much of the past decade transitioning from 80-plus-year-old baking facilities in Philadelphia to a new facility in the nearby Philadelphia Navy Yard. The company sustained a number of financial setbacks over the past year, and in January said it had engaged an investment banker to explore strategic options.
“This merger with Flowers will create value for Tasty’s shareholders, employees, and the Philadelphia community,” said Charles P. Pizzi, president and c.e.o. of Tasty. “It will provide immediate cash value to our stockholders at an attractive premium over the current trading value. We believe the combination of Tasty with Flowers will create a company with long-term advantages for our employees, customers, suppliers, independent sales distributors and other constituents. Flowers also shares Tasty’s commitment to the communities in which it operates. We have a deep respect for Flowers’ approach to managing its business and employees, and we look forward to working closely with the Flowers team to complete the merger as quickly as possible and to ensure a smooth transition.”
The $4 per share acquisition price represents a 148% premium to the closing market price of $1.61 on March 8 and equates to a market capitalization of just over $30 million. It also includes outstanding debt of more than $110 million.
The deal has been unanimously approved by both boards of directors and is expected to close in the second quarter.