LEWISTON, Maine — George Deese has had his eye on Lepage Bakeries for some time. He admired the company whose scents are as much a part of the downtown as Lisbon Street and Kennedy Park.
“You would not be surprised that we have always been interested in having Lepage become a part of Flowers Foods,” Deese, chairman and CEO of Flowers, told investors and analysts Thursday shortly after his Georgia-based company announced plans to buy Lepage Bakeries for $370 million.
Lepage Bakeries, a 109-year-old-company, makes Country Kitchen and Barowsky’s breads, rolls and doughnuts. Flowers Foods’ brands include Nature’s Own and Tastykake. The purchase gives the company a foothold in New England; most of its 41 bakeries are in the southern half of the U.S.
Locally, the announcement required a lot of reading between the lines. Lepage Bakeries directed questions to Flowers Foods. Flowers officials declined to discuss jobs and future employment, but in a conference call praised the work force and talked about the two bakeries on Park and Canal streets and one in Brattleboro, Vt., as having room for growth.
The deal, for $320 million in cash and $50 million in stock, covers Lepage’s three bakeries, which together employ 550 people and have $166 million in annual sales, according to a release from Flowers Foods.
Andrew Barowsky and Albert Lepage will stay at Lepage Bakeries as co-chairmen, with Barowsky also becoming a new vice chairman of innovation for Flowers Foods.
In a joint statement, the two men said: “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.”
Deese said he has known Barowsky and Lepage for three decades.
“I’ve said for a number of years we’ve wanted to do this,” he told investors. “I think as the industry continues to consolidate, I think all of the independents are looking to see what is the right time: ‘Do I want to reinvest in the business or is it time to cash out?’ Retailers continue to merge and are stronger. It’s just a time in the history of the baking industry. Everybody has to look and see: ‘Can I be a factor in the big scheme of the industry?'”
Akshay Jagdale, a vice president and equity analyst with KeyBanc Capital Markets who listened in on the conference call, said afterward that analysts saw another purchase coming; they just weren’t sure where.
“It makes sense,” he said. “It fits with the company’s strategy.”
Flowers Foods has typically bought family-owned bakeries, Jagdale said. “They are one of the best-managed publicly traded companies that I follow. They’ve had a long history of consistent growth in sales and earnings.”
Company officials on the conference call said the purchase of Lepage and its supply routes gives Flowers access to 18 million more consumers and room to grow its other brands along the East Coast.
In addition, “One of the appealing things about Lepage is the available capacity that they do have on the production side,” President Allen Shiver told investors.
Flowers Foods is the second-largest packaged bakery goods producer in the country, according to the company. It expects to close the deal in the second quarter. Lepage Bakeries will keep its name.
Though it has corporate headquarters in Auburn, the company is most associated with Lewiston, where one bakery takes up a block of Lisbon Street.
“Lepage has been a longtime, very stable employer in the heart of downtown,” said Lincoln Jeffers, the city’s economic and community development director. “I’m hopeful that Lepage will maintain its presence locally and perhaps this could mean [future growth].”
Ten years ago, the city closed a section of Birch Street so one plant could expand. At that time, it employed about 100 people.
At the Country Kitchen Thrift Store in Lewiston on Thursday morning, employees declined to comment on the sale, saying they did not have approval from their boss to talk to the media.
Lindsay Tice contributed to this report.