Fitch: Flowers Foods unaffected by acquisition

Fitch Ratings said that Flowers Foods, Inc.'s ratings are unaffected by news of a definitive merger agreement with Tasty Baking Co.

Under the agreement, Flowers would acquire all of Tasty's outstanding shares for $165 million, Fitch said.

Tasty is a leading baker of snack cakes, pies, cookies and donuts and its major brand is Tastykake.

The acquisition is subject to customary closing conditions and approvals.

The total estimated purchase price of $165 million includes about $111 million in Tasty debt and $3.4 million in unpaid rent and capital projects as of March 25, Fitch said.

With less than $7 million in cash on hand, Fitch said it expects that Flowers will finance the acquisition primarily through its $250 million bank credit agreement, which had $245 million in availability at the fiscal year end.

The credit facility expires in October 2012. The agency said it would expect the company to replace or increase the revolver as there would be less than $100 million available if this transaction is primarily funded with this facility.

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