TastyKake Maker Considering Merger or Sale

Tasty Baking (TSTY), the maker of Tastykakes, said it is looking at options including a merger or sale as the company feels the pressure from declining sales.

The company is also facing "unanticipated operational challenges" related to its bakery in Philadelphia's Navy Yard, CEO Charles Pizzi said, according to The Associated Press. The company has now lowered projected savings in the fourth quarter to $10 million from $13 million.

Tasty Baking also cited a bankruptcy filing by the owner of A&P, Super Fresh and Pathmark grocery chains as well as rising commodity prices as contributing to the financial pressure.

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The company has hired an outside financial adviser to examine options including "a potential combination with another company as part of the consolidation occurring in the baking goods industry or a potential sale of the company," Tasty Basking said in a statement.

Some of the company's creditors have agreed to suspend some debt payments related to the construction of a $78 million bakery and warehouse. Tasty Baking shares plunged as much as 37% on Wednesday, the AP said.

Still, the company plans to expand its business, according to Pizzi.

"To that end, we continue to partner with new grocery and convenience store customers within our core markets, increase penetration with key customers, and launch new products into the marketplace," he said. "Finally, despite the challenges we have faced, we have continued to outpace the category and grow our overall market share."