Georgia Company Purchases Tastykake For $165 Million

PHILADELPHIA (CBS) – A Georgia-based company is taking over Philadelphia’s Tasty Baking Company.

After Tasty’s profits went stale in the economic downturn and the company piled on roughly $100 million in debt to build and move into its new plant in the Navy Yard in South Philadelphia, a larger competitor, Flowers Foods has been mentioned as a suitor.

The Flower Foods statement calls it a “definitive merger agreement” whereby Flower Foods will acquire all of the outstanding shares of Tasty common stock for $4.00 a share, for a total purchase price of about $165 million.  That includes the debt Tasty has taken on.

Industry observers believe it will strengthen Flowers’ snack cake business through the addition of the iconic Tastykake brand, and expand the company’s geographic reach.

Trading in Tasty’s shares were halted after Flowers made the offer.  Its previous close was $1.61.  Before the 9:30am Monday morning bell, the shares were at $3.98.

Tasty was on the ropes earlier this year but got a reprieve until June 30th by securing public and private debt financing (see related story).  But one of the stipulations was that it pursue consummating a sale or merger.

Tasty Baking declined any interviews and would not comment about the future of the company’s 740 full time employees. Instead, the company released a video clip of company president Charles Pizzi.

“Tastykake will be a Philadelphia brand made here by Philadelphians,” promised Pizzi.

Business professor Michael Boldin says the sale was inevitable because of company struggles. He expects the people and the production to stay in South Philly. He says the only jobs in jeopardy are management.

“No one was happy with Tastykake financials lately. [Managements’] longevity with the company is limited,” says Boldin.

Flowers says it is delighted to welcome Tasty’s 740 workers to the Flowers Foods family, adding that its plan is to invest in the combined businesses for sustainable and profitable growth.

Reported by Steve Tawa, KYW Newsradio; Oren Liebermann CBS 3

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One Comment

  1. nick says:

    So at least the cakes will still be around and hopefully have the same taste. It is saddening because this is a Philadelphia-founded business, but wherever cities it ends up being distributed to, us Philadelphians can say we had them first. Me saying ” I want a Flower Foods cake” just doesn’t sound right though.

  2. Love Tasty Kakes says:

    I just hope you continue making Tasty Kakes. Not the Southern sugary stuff everything in the South seems to love. If any of you who live in the Philadelphia area moved, you would miss Tasty Kakes and Tasty Pies. To me, they are the best.

    1. sandra says:

      Love those tasty cakes also the need to but some jelly back in those krimpets.

  3. says:

    The quality of their food has been going downhill for awhile now. If anything, I’m hopeful that Flowers can turn things around.

  4. Barbara says:

    Just sick of all American born companies being bought out by forgein based companies period..We don’t own our country anymore, every other country does…

    1. marcus says:

      Sorry, isn’t Georgia in America???
      Did I miss something???

  5. SonuvaZeke says:

    reverse carpet bagging…nice!…lets hope these Rebels remove the paraffin from the ingredients

  6. Brian Smith says:

    Yes, at least it is an American company. Is anyone aware of the fact that a Mexican company now owns Stroehmann, Meirs, Friehoffer, Arnold, Thomas’ breads as well as Entenmann’s cakes and Boboli pizza?

  7. kay says:

    @PhilaMike and NS,

    You both hit the nail on the head; Charlie Pizzi mismanaged this company. I am sure it will be only a few years until the operations move out of the city. If/when that happens, it will be the last TastyKake I ever buy.

    1. Kozmo69 says:

      I agree. A clear case of poor management and “NO” vision. They should of been reinvesting in the business for years. Tastycake is a great product when compared to similar companies with National footprints. The brand had great potential during America’s growth binge in the last decade and the management failed to capitalize. Oh well, perhaps the new folks foresee the potential– they certainly have the cash. This is a great example of folks at the helm are not always the brightest.

    2. Rick says:

      I totaly agree with your comment. This is the same company that bought Mrs. Smith’s Pies where I worked 21 years only to close it down and move operations south for the cheaper labor and utility rates.

  8. grumpy says:

    Try management going in debt over their brainless move to the Navy Yard.

    1. Anthony Ciotti says:

      eh both. I don’t know, just sick of everything moving out of the area!

  9. Just Sayin' says:

    Just glad its an American company buying an American company. Gerber, etc. belong to foreign countries now!!!!!

  10. Laura Kate MacArthur says:

    Been missing Tastykake out here in Ohio. Any chance the purchase will result in expansion of routes?

  11. NS says:

    Charlie Pizzi did a great job wrecking and mismanaging this company.

    1. PhilaMike says:

      TastyKake used to use fresh eggs and pure butter in thier products but switched to powdered eggs and vegatable shortning and cut the sizes down..The beginning of the END…..Should have kept the bakery where it was and not go millions in debt moving to another facility….CEOs can be stupid too…..

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