Flowers Foods Inc. and Tasty Baking Co. announced a definitive merger agreement whereby Flowers will acquire all of the outstanding shares of Tasty common stock for $4.00 per share in cash 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 approximately $115 million to $125 million to Flowers' 2011 sales, contribute approximately $10 million to $12 million to Flowers' 2011 EBITDA, and be neutral to slightly accretive to 2011 earnings per share, excluding one-time costs of the transaction; and
- Contribute approximately $210 million to $225 million to Flowers' 2012 sales, contribute approximately $25 million to $30 million to 2012 EBITDA, and contribute approximately $.06 to $.09 per diluted share.
Under the terms of the agreement, Flowers will commence a tender offer to acquire all of the outstanding shares of Tasty common stock for $4.00 per share in cash. 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and approvals, as well as a majority of the outstanding shares of Tasty common stock being validly tendered and not withdrawn in the tender offer.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 in a prepared statement. "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 P. Pizzi, Tasty's President and CEO, said, "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."