Tastykake Gets Sold (Which, Believe It Or Not, Is Good News)
It was virtually impossible to be alive, awake and in Philadelphia this morning without hearing the news that the local company that makes Tastykakes–everyone’s favorite hangover breakfast iconic snack cake–had been sold to a bunch of out-of-town yahoos for something like a bazillion dollars.
The story was everywhere. I heard it four times while sitting in traffic on my way into the office, and it was being covered with all the fervor of a high-risk moon-shot or the rescue of some kid from a well. Still, the details are fairly simple: Flowers Foods, a leading player in the packaged baked-goods game based out of Thomasville, Georgia, has made a move to gobble up Tasty Baking (the company that has made Tastykakes forever) in its entirety, paying a huge premium for outstanding stock, sucking up a massive amount of debt and laying out about $34 million in cash in order to acquire the Tastykakes brand, facilities, employees and Northeast market dominance. The bad news is, this is the end of an era for a regional food company which started out in 1914 as a small local baking company and grew to become so inextricably linked with the Philadelphia area that no quote/unquote Philly Cheesesteak Shop could open west of the Mississippi without displaying a few, half-crushed packs of Butterscotch Krimpets by the register without setting off rioting among expat Philadelphians. But the good news?
The good news is, you’ll still actually be able to get Tastykakes which, up until very recently, was not even close to being a sure thing. Just a couple weeks ago, Tasty Baking was frantically trying to sell itself on the street to anyone with an eye for a sweet but troubled partner, saying things like how its own accountants were “expressing substantial doubt about the Company’s ability to continue as a going concern.”
Because yeah, nothing is sexier to potential buyers than a death knell…
The company had already dropped 70% of its value in a year, deliberately skipped one debt payment (which is the corporate equivalent of that game you play with the credit card companies when money gets tight, calling up the service center and saying, “Dude, no… That check is totally in the mail.”), and following a jump in the price of flour and a move into an expensive new facility down in the Navy Yard, Tasty Baking was, in the technical parlance of the financial sector, just totally and completely fucked. There was a very good chance that, without this 11th-hour buy-out by Flowers, Tastykakes would’ve simply vanished into a black hole of bad debt and bankruptcy negotiation, leaving the world (or at least this corner of it) all the poorer for its lack of unusually-spelled snack options.
But in addition to being absolutely necessary for the survival of the Tastykakes brand, the deal with Flowers comes with a bit of a silver lining, too. At the moment, it appears as though the local production facilities were part of what made the deal attractive, so plans right now are for Tastykakes to continue being made locally. The other thing that made the buy-out worthwhile? Flowers’ ability to “add Tastykake products to Flowers’ existing direct-store-delivery network,” meaning that Tastykakes will now be available in a wider geographic area than just the Northeast. And that’s not just good for Philly, that’s good for America.
If you’re interested, you can check out the entire Flowers Foods/Tasty Baking announcement right here for all the nitty-gritty financial stuff. Or you can just go out and celebrate the survival-at-any-cost times that we live in by stuffing yourself full of Kandy Kakes and trying to forget how close we came to not having any Tastykakes at all.