Flowers Foods Inc. will buy troubled Tasty Baking Co. in a cash deal worth $165 million, including Tasty Baking’s debt, reports the Atlanta Business Chronicle.
The deal is expected to close in the second quarter.
Tasty Baking is an iconic Philadelphia company known for its more than 100 Tastykake and Kandy Kake snack products. The company has manufacturing facilities in Philadelphia and Oxford, Pa., 740 employees and 413 independent sales distributors.
Tasty, which was founded in Philadelphia in 1914, hit financial hard times recently with a debt load of more than $100 million and lack of operating cash. In January, the company said it was seeking a buyout or merger and indicated it was struggling to keep up with payments on its new, $78 million production facility in the Philadelphia Navy Yard. On Jan. 14, it received $6.5 million in interim financing. In March delayed its annual earnings report saying it expected to lose $45 million.
Thomasville, Ga.-based Flowers Foods said to the Chronicle that the acquisition adds some 24 million consumers near its existing geographic footprint, boosting Flowers’ market access to about 61 percent of the U.S. population through its direct-store-delivery systems. It will allow it to widen the reach of the Nature’s Own brand through Tasty’s marketing areas. And it expects Tasty Baking will add $210 million to $225 million in sales in 2012.
Flowers Foods—whose brands include Nature’s Own, Whitewheat, Cobblestone Mill, Blue Bird, and Mrs. Freshley’s—generated a $137 million profit on $2.57 billion in sales in 2010.
“We are very pleased with the addition of Tasty to Flowers,” said George E. Deese, Flowers Foods’ chairman and CEO, to the Chronicle. “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.”