Tastykake sale: Plants stay open; buyer to repay PA
Tastykake sold to Georgia-based Flowers Foods
Tastykake sale: Plants stay open; buyer to repay PA
Joseph N. DiStefano
Philadelphia's money-losing Tasty Baking Co. has agreed to be purchased by Flowers Foods, Thomasville, Georgia, for $4 a share. That's double the stock's recent price and a premium to anyone who bought the stock this winter, but a discount to Tasty share prices in recent years. Read Flowers' statement here.
The sale works out to $34 million in cash for Tasty's 8.5 million shares. "We are delighted to welcome Tasty's 740 dedicated employees and 413 independent sales distributors to the Flowers Foods family. Our plans are to invest in the combined business for sustainable and profitable growth, and they will be an important part of Flowers' ongoing success," says Flowers boss George Deese.
Flowers also says it will assume Tasty's "existing indebtedness" totalling around $131 million. That looks like good news for Pennsylvania taxpayers: Tasty had borrowed around $80 million for the company's new South Philadelphia plant, about half of which is owed to state programs, the rest to Citizens Bank and other lenders.
The deal is part of Flowers' ambitious strategy to grow beyond the South into a national chain of fresh and frozen snacks. Flowers says it will keep Tasty's new $80 million bakery at the Navy Yard complex in South Philadelphia and its second plant in Oxford, Chester County.
Flowers wants to sell Mrs. Freshley's sweet rolls, Nature's Own breads and other Flowers products "throughout Tasty's geographic footprint" in the mid-Atlantic states, and "will require additional acquisitions to add needed production capacity" to make that happen. Flowers also said it will offer Tastykakes down South. Spokeswoman Mary Crier had no immediate comment on what happened to a 2002 joint distribution deal between the companies.
Tasty in January asked creditors to delay payments while it sought a buyer or new investors, citing disappointing financial results from the new plant along with higher corn syrup costs and supermarket bankruptcies. The deal "ensures that Tastykakes will continue to be made by Philadelphians in Philadelphia," Tasty boss Charles Pizzi said in a statement distributed by Flowers.
Flowers is one of the companies identified by Costello Asset Management's Robert Costello as a likely Tasty buyer in my Jan. 5 post here.
"They did a phenomenal job getting the deal done. It could have been a bankruptcy," Costello told me. "It's an excellent company," he said of Flowers. "Return on equity is 18%. They're very efficient. There's no question they're going to change the way things are done here. It'll take a year, it won't happen overnight," he said. "Will (Flowers) cannibalize Tasty sales? Overall I think Tasty will benefit" if Flowers is able to market Tastykakes in parts of its Southern base.
Flowers had sought to buy Tasty in the past but talks led nowhere. Costello said Flowers would likely have closed Tasty's former Hunting Park plant if Pizzi hadn't built the new plant; if so, the move proved expensive for shareholders, while saving Tasty's Philadelphia jobs.
Flowers is publicly-traded, but the Amos McMullian family of Macon, Ga., remain major shareholders. Flowers makes Mrs. Freshley's sugary packaged snacks and Nature's Own breads, among other fresh and frozen products. Flowers is also a past owner of the former Mrs. Paul's frozen-foods plant in Pottstown.
I tried to buy some Tastykake stuff and boy did the kill the flavor I remember as a kid— faf72- The old union template is no longer a viable business model. Refusal to change with the times has cost Philadelphia some of the nations best and most unique products not to mention jobs. How long will the Big Unions continue to kill American business while the world economy runs right by us? Concerning the best snack cakes and pies anywhere lets hope that the recipes are not tampered with in the process. The outside world hasn't lived until it has chowed down on a Butterscotch Krimpet.The rest of the country should love it.
- I agree with fat72, the taste is gone ~ nothing like it used to be and I also agree that this is just the beginning and they will eventually move out of our area. Another one bites the dust!
— artofnoise - I will never buy a Tastykake product again. Charles Pizzi should be ashamed - he ran this company into the ground. I will miss them.— JB215
- I'd say the author of this article is skeptical, based on his photo with the raised eyebrow.— Dunk
- And he SCORES for "A Tastykake"— elfman
- Now the company can COMPETE and make a better product to survive, 'cause Little Debbies is much better than not-so-Tastykake. No more state handouts to Charlie Pizzi. what a crook.— Don Cornelius
- Heartbreaking. Philly icon is now gone.— phillyjhawk
- It has saddened me over the last several years that the once fine Tastykake brand and product flavor has gone down the tubes. The last time I bought anything Tastykake it was virtually inedible. Now it's just an overpriced tasteless product that I wouldn't feed to my dog. Moving it down to Georgia guarantees it will remain that way. The Delaware Valley loses another piece of it's unique history. Shame!— quizzmo
- Tastykakes would taste the same when they're made by a Georgia company. Come to think of it, they haven't tasted the same since Tastykake was making them. Remember the all natural ingredients? Remember when cherry pies had just cherries? Remember when the pies didn't fall apart? Remember when the cupcakes were the size of a cupcake? Me neither.— JoeC.
- Right on, JoeC.— M60tanker
- Pizzi needs to go! If you think he did not bury the company your crazy. Remember the spike in price then Tastykakes were not on sale for awhile? The packaging has been changed....why? The factory needed to be built but not to the point of putting it out of business. A few of you commmented on the Taste but there are NO TRANS FATS in there! I think they are still great. I would rather be healthier then eat trans fat!— Spicy
- America, in general, produces mostly garbage at this stage. Things will only be getting worse.— jabs69
- Tastykake was run into the ground but i dont understand people complaining about taste. Sure it tastes different over the years, trying to go for more "healthy" ingredients, but i DOUBLE DOG DARE any of you to buy a little debbie snack or a Hostess pie and compare it to the taste and quality of any tastykake. ANnnnnnnnnnnnnnd BOOM goes the dynamite.— qwerty83
- When you can't tell the difference between a peach and an apple pie something is really wrong, this whole transfat thing is ruining the taste of everything, just don't eat three a day and you'll be fine, but no the good old nanny state scared the bejeezus out of people and tastykakes and all the others taste like stale cardboard. People have to stand up and say no bring back the original recipes and they would dominate the market, I can see it now Tastykake all the transfat you could ever want and the good taste too. Man I wish someone would snub the treehuggers and give us what we want something that doesn't taste like a tree!— ease
