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.
all this talk over the taset of Tasty kake is BS. Our personal preferences change over time. And i am glad if it were the case that food doesn't taste EXACTLY the same as it did when I was younger.— j$- are they tandy cakes? or kandy cakes?— BGenius
- Started in 1914. Steady growth until 2002 when Pizzi took over. Died in 2011. Nice work Charlie: kill in 8.5 what others grew for nearly a century.— MrGBojangles
- If they do try to market across the country, they have to do a better job of it than was done in the Midwest. WE used to have family members ship out what they could or cram as many as possible into our airline bags if we were not driving back. One day we stopped at a gas station on I-80 in western Iowa and found Tastykakes being sold-- total shock. A couple of years later Tastykakes suddenly showed up in Iowa supermarkets, no advertising or informing shoppers what they were. The first batchs were immediately swooped up by Philly transplants, but I doubt any other shoppers bothered to find out what they were. In a few months they were no longer available.— atp2007
- First one to go:Charlie Pizzi.— aguckin
- find me one company that has been bought whose former employees still had a job two years later. attention tastykake employees, get those resumes ready. ask former genuardi's employee or rohm & haas employees or almost anyone else. good luck to those employees. they're going to need it. walk before they make you run, because it is coming sure as God made green apples.— doo dah man
Comment removed.- marketing idea: tastykake should have a "deluxe" line of their products, made the way they used to make them (with taste and stuff). hey, charge accordingly, it costs more to make better product. people will either buy them or not..........— justintime73
- Comment removed.
- I live in Sc originally from Delco. Love Nature's Own and really hoping to see Tastykakes at my local stores here.— crohnkiller
- This is the end.— keep deleting my account
- Comment removed.
- Excellent. They definitely were going to be sold and I was hoping for even a 20-30% premium on what I paid. 10x was I was expecting.— PhillyGuy77
- While this is somewhat sad, the really sad part is that the people running TBC couldn't figure how to run the company in a way to make a profit. What amazes me is how may products they added over the years, and that NEVER works! If people believe the product had deteriorated over the years, hang on from here on out!— BEMiller
- Can any of the posters here read a company financial report? Guess not.— PhillyGuy77
