Lepage, of Auburn, is a $166 million-in-sales maker of breads, buns and rolls under the Country Kitchen and Barowsky's Organic brands. The company has three bakeries in Maine and Vermont.
Terms of the deal call for Thomasville, Ga.-based Flowers to pay $300 million in cash at closing for privately held Lepage, with an additional $20 million in deferred cash payments to be made beginning on the fourth anniversary of the closing date. Lepage owners will also receive about $50 million worth of Flowers stock.
Flowers, the second-largest U.S. producer and marketer of packaged bakery foods for retail and food services customers, in a statement said that the purchase would expand its presence in New England and New York, expanding its fresh bakery products sales to about 18 million new potential customers. The deal also provides a direct delivery channel for other Flowers products.
Company chairman and CEO George E. Deese said in a statement that the deal will provide Flowers with access to about 70% of the U.S. population, bringing the company close to its goal of serving at least 75% of the country by 2016.
"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," Deese said. "We look forward to the anticipated growth opportunities this acquisition is expected to provide as we continue to expand the geographic footprint of our Nature's Own and Tastykake brands."
Flowers said that post-deal Lepage would continue to operate under its current name. The company expects the purchase to add between 3 cents and 5 cents per share to its fiscal 2012 earnings, excluding acquisition costs, and 8 cents to 12 cents in fiscal 2013.
The deal is the second for Flowers in a matter of months, following its April 11 purchase of Tasty Baking Co. of Philadelphia for $165 million. Flowers has completed more than 100 acquisitions since it went public in 1968, including an October 2009 purchase of tortilla maker Leo's Foods Inc. and an August 2008 deal for Phoenix's Holsum Bakery Inc.
A Jones Day team including partners Sterling Spainhour Jr., Bill Zawrotny, Lizanne Thomas, Mark Hanson, Rory Lyons, Travis DeHaven, Mike Lee and Tom Smith provided legal counsel to Flowers in its purchase of Lepage, with Eric Brook, Joseph DiMondi and Jim Stynes of Deutsche Bank AG providing financial advice.
Lepage was advised by Bigelow Co. and Goodwin Procter LLP.
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