Tuesday, September 1, 2015

Bimbo may save Tastykake; Debbie wants "to see them die"

Would J&J Snack Foods, Bimbo Bread buy Tastykake maker?

Bimbo may save Tastykake; Debbie wants "to see them die"

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I asked longtime Tasty Baking Co. watcher Robert Costello, owner of $50 million Costello Asset Management, Huntingdon Valley, about some of the potential buyers for Philadelphia's favorite junk food company if the troubled baker decides to sell.

"It's Bimbo or Flowers," says Costello:

Bimbo Bakeries USA is the Mexican-owned, Horsham-based owner of Arnold, Freihofer's and Stroehman breads, Boboli pizza, Entenmann's cakes, Thomas' English muffins, and many other US brands. "Bimbo has more money than God," Costello says.

Bimbo recently hired Vincent A. Melchiorre, a former Tastykake marketing executive. Bimbo also lately rented a billboard advertising its corporate brand on the Schuylkill Expressway near Tastykake's new plant. Bimbo wasn't returning calls today.

Flowers Foods is the Georgia-based, publicly-traded maker of Mrs. Freshley's cakes, Nature's Own bread and other brands, and it's shown interest in Tasty before. Flowers didn't call back either.

What about Pennsauken's own J&J Snack Foods? "No way," said Costello. With no debt and tens of millions in cash, "they could buy Tastyake in a burp. But J&J makes stuff that lasts for weeks. They buy struggling national brands with long shelf life, or else frozen products, and turn them around. They have not been interested in regional operations with a short shelf life."

How about Tennessee-based Little Debbie? "Little Debbie would love to see (Tastykake) die," Costello said. "They ship cakes that have a long shelf life, from nonunion plants that pay a fraction of (Tasty) wages."

If Tasty sells, someone will buy the plant and keep it running, Costello predicted. "The question is, how many people and how much overhead will the buyer keep?"

What if a buyer promises to keep Tasty people working for awhile - if Pennsylvania agrees to ease terms on the $31 million Tastykake owes the state? "If I was the state," said Costello, "I'd bargain hard."

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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