Flowers Foods, Inc (NYSE: FLO) of Georgia today announced it has entered into a definitive agreement to acquireLepage Bakeries, Inc, ofAuburn, Maine,for$370 millionin cash and stock. Flowers expects to complete the transaction in its fiscal second quarter, pending necessary regulatory approvals. Lepage also operates a bakery in Brattleboro, Vermont. Flowers plans to retain all of Lepage's three plants, including all of its 550 employees, according to Mainebiz.com.
In summary, the transaction:
Adds a best-in-class baking company with over$166 millionin net sales to Flowers;
Complements Flowers' existing portfolio of strong brands by adding leading regional brands --Country KitchenandBarowsky's --and a broader variety of breads, buns, and rolls to Flowers;
Is expected to add$0.03 to $0.05to Flowers' earnings per share in FY2012, excluding acquisition costs and$0.08to$0.12to earnings per share in FY2013;
Expands Flowers' presence inNew EnglandandNew York, making the company's fresh bakery products available to an additional 18 million people;
Adds three highly efficient bakeries, two inLewiston, Maine, and one inBrattleboro, Vt., with available production capacity for Flowers' expansion in mid-Atlantic and Northeast markets;
Provides a DSD (direct-store-delivery) platform to accelerate penetration ofNature's OwnandTastykakebrands in the Northeast;
Brings Flowers an experienced team focused on quality and innovation; current Lepage leaders
Andrew Barowsky
and
Albert Lepage
will continue at the helm of Lepage Bakeries as co-chairmen; Barowsky also will serve as vice chairman of innovation forFlowers Foods.
Lepage Bakeries is a best-in-class independent baking company with efficient operations, high-quality products, strong regional brands, and a solid distribution system serving retail and foodservice customers throughout the Northeast.
George E. Deese
,Flowers Foods' chairman and chief executive officer, said, "The Lepage name is one of the oldest and most respected in the baking industry and we are fortunate to combine this fine organization withFlowers Foods. Lepage has operating strategies similar to Flowers' and the Lepage team is known for its innovation and quality. We believe the addition of Lepage supports our strategy as it will bring efficient bakeries with available production capacity, access to markets in the Northeast, new products and brands, and more than 550 experienced team members to our company. Once completed, the acquisition will increase our DSD access from 64% to 70% of the U.S. population, moving us closer to our goal of at least 75% by 2016. We look forward to the anticipated growth opportunities this acquisition is expected to provide as we continue to expand the geographic footprint of ourNature's OwnandTastykakebrands."
Commenting on behalf of Lepage Bakeries,
Andy Barowsky
, president and chief executive officer, and
Albert Lepage
, chairman of the board, said, "Our team is pleased to become part ofFlowers Foods. Our companies have a shared commitment to the highest quality products, excellent customer service, ongoing innovation, and capital investments to keep our bakeries the best in the industry as well as a similar culture. We look forward to continuing to innovate with new products and improved processes when we join the Flowers team."
Lepage Bakeries will operate under its current name as a part ofFlowers Foods' DSD segment and Barowsky and Lepage will serve as co-chairmen of the board of Lepage Bakeries. In addition, Barowsky will serve as vice chairman of innovation forFlowers Foods. "Lepage Bakeries has achieved strong sales and earnings growth under the leadership of the Barowsky/Lepage team, and we expect that growth trend to continue once the transaction is accomplished," Deese said.
Details of the Transaction
Flowers has agreed to acquireLepage Bakeries, Inc.and certain affiliated companies for a total purchase price of$370 million. The transaction will be accomplished through:
The purchase by a wholly-owned subsidiary of Flowers of all the issued and outstanding shares ofLepage Bakeries, Inc.and certain of its affiliates in exchange for$300 millionin cash at closing and$20 millionin total deferred cash payments beginning on the fourth anniversary of the closing date; and
The merger of certain other affiliates of Lepage with and into a second wholly-owned subsidiary of Flowers in exchange for a number of shares of Flowers' common stock, par value$.01per share, valued at$50 million.
The cash component of the transaction will be funded with a combination of cash on hand and existing credit facilities. The transaction is subject to customary conditions, including receipt of required regulatory approvals.
Background on Lepage Bakeries
Lepage Bakeries, founded in 1903, combines more than 100 years of baking tradition with state-of-the-art baking operations to deliver great-tasting, high-quality breads, rolls, and donuts to customers throughout the Northeastern U.S. sold under theCountry KitchenandBarowsky'sbrands. Lepage Bakeries is dedicated to being the most consistent, productive, and respected baking company; to exceeding customer expectations; and to providing economic opportunity for all its associates. Mainebiz.com reports it has$166 million in net annual sales.
Background onFlowers Foods(NYSE: FLO)
Headquartered inThomasville, Ga.,Flowers Foodsis the second largest producer and marketer of packaged bakery foods for retail and foodservice customers inthe United Stateswith 2011 sales of$2.8 billion. Flowers operates 41 bakeries that produce a wide range of bakery products sold through an extensive direct-store-delivery network that encompasses the Southeast, Mid-Atlantic, andSouthwestas well as select markets in the Northeast,CaliforniaandNevada, and nationwide through other delivery systems. Among the company's top brands areNature's Own,Whitewheat,Tastykake,andMrs. Freshley's.
Statements contained in this press release that are not historical facts are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. Other factors that may cause actual results to differ from the forward-looking statements contained in this release and that may affect the company's prospects in general include, but are not limited to, (a) competitive conditions in the baked foods industry, including promotional and price competition, (b) changes in consumer demand for our products, (c) the success of productivity improvements and new product introductions, (d) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer's business, (e) fluctuations in commodity pricing, (f) our ability to fully integrate recent acquisitions into our business, and (g) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value. In addition, our results may also be affected by general factors such as economic and business conditions (including the baked foods markets), interest and inflation rates and such other factors as are described in the company's filings with the Securities and Exchange Commission.
SOURCEFlowers Foods, Inc.THOMASVILLE, Ga.,May 31, 2012/PRNewswire/ --