Flowers Foods and Tasty Baking Co. announced a definitive merger agreement where Flowers will acquire all of the outstanding shares of Tasty common stock in cash for $4 per share for a total purchase price of approximately $165 million.


Flowers Foods, Thomasville, Ga., and Tasty Baking Co., Philadelphia, announced a definitive merger agreement where Flowers will acquire all of the outstanding shares of Tasty common stock in cash for $4 per share for a total purchase price of approximately $165 million, including Tasty's existing indebtedness.

The transaction is expected to:
•    Strengthen Flowers' snack cake business through the addition of the iconic Tastykake snack cake brand;
•    Expand Flowers' geographic reach, immediately adding more than 24 million consumers who are contiguous with Flowers' current footprint;
•    Add two highly efficient bakeries with additional capacity to support growth;
•    Generate significant operating synergies through additional revenue and cost-saving opportunities;
•    Add $115-125 million to Flowers' 2011 sales, contribute $10-$12 million to Flowers' 2011 earnings before interest, taxes, depreciation and amortization (EBITDA), and be neutral to slightly accretive to 2011 earnings per share, excluding one-time costs of the transaction; and
•    Contribute $210-$225 million to Flowers' 2012 sales, contribute $25-30 million to 2012 EBITDA, and contribute $.06-.09 per diluted share.

The transaction is expected to close during the second quarter of 2011 and is subject to customary closing conditions and approvals, as well as a majority of the outstanding shares of Tasty common stock being validly tendered and not withdrawn in the tender offer. The agreement has been unanimously approved by the boards of directors of both companies. Flowers intends to fund the transaction through cash-on-hand and credit facilities. There is no financing condition to the offer. Upon completion of the transaction, Tasty will become part of Flowers' direct-store-delivery segment.

"We are very pleased with the addition of Tasty to Flowers," said George E. Deese, Flowers Foods' chairman and CEO. "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.

"Tasty and Flowers have a similar heritage and share the same core values of integrity, service, quality and commitment," Deese continued. "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."

Charles Pizzi, Tasty's president and CEO, says, "This merger with Flowers will create value for Tasty's shareholders, employees and the Philadelphia community. 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."

Flowers has experience integrating acquisitions, having completed more than 100 acquisitions since listing publicly in 1968, including 11 in the past decade. Upon the completion of the tender offer and subsequent merger, Flowers and Tasty will work closely to achieve a successful integration and to realize the benefits of the transaction.