The combination of Flowers and Tasty leverages their complementary product offerings and market strengths and unites two companies with rich traditions of delivering quality and value to their customers and consumers. This combination is expected to result in:
Creation of a larger business with a complementary portfolio of high-quality branded and store-brand bakery products;
- A deeper penetration of the snack cake category, which should strengthen customer relationships over a broader geography;
- The ability to grow the Tastykake brand in its current markets and provide new opportunities for Tastykake's independent sales distributors;
- The opportunity to expand distribution of the Tastykake brand through the majority of Flowers' 4,000 independent distributors, whose existing territories have access to 53 percent of the U.S. population;
- The addition of two highly efficient bakeries strategically located in the heart of the Northeast corridor. The available snack cake capacity in these state-of-the-art facilities provides a platform for further profitable growth;
- The immediate addition of approximately 24 million consumers who are contiguous to Flowers Foods' existing geographic footprint, which will increase Flowers' market access to about 61 percent of the U.S. population through its direct-store-delivery systems;
- The potential to expand the reach of Flowers' Nature's Own brand through Tasty's marketing areas as Flowers continues to expand and acquire additional production capacity for bread, buns and rolls; and
- A strong, combined financial profile, with an anticipated sales contribution from the transaction of $115 million to $125 million for 2011, contributing approximately $10 million to $12 million to EBITDA with the effect on 2011 earnings per share expected to be neutral to slightly accretive, excluding any one-time expenses. In 2012, we anticipate Tasty to contribute approximately $210 million to $225 million to sales with an expected $25 million to $30 million EBITDA contribution and anticipate the transaction to be accretive approximately $.06 to $.09 per diluted share.
"We take a very deliberate approach to selecting acquisitions, focusing on strong brands and premium products that extend our capabilities and geographic reach. We believe Tasty is highly consistent with our acquisition strategy and also offers substantial synergy potential that we expect will generate a strong financial return for our shareholders," said Deese.
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.