by Timothy McQuiston, Vermont Business Magazine What sounded like a promising result for Koffee Kup Bakery in Burlington and Vermont Bread in Brattleboro is now in question. Flowers Foods, Inc (NYSE: FLO), producer of Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Tastykake, and other bakery foods, announced Monday that it has acquired the assets of Koffee Kup Bakery, Inc (KKB) from the court-appointed receiver of the assets. Financial terms of the transaction were not disclosed.
The acquisition includes three closed bakeries located in Burlington and Brattleboro, Vermont and North Grosvenor Dale, Connecticut, and the Koffee Kup Bakery and Vermont Bread Company brands. According to the Brattleboro Reformer, Flowers has no immediate plans to reopen the plants, but former employees will get back pay. When the plant closed, the receiver had clawed back some of the pending compensation. But as of now, the jobs will not be coming back.
Just at the end of May, Blair and Rosalyn Hyslop, from Sussex, New Brunswick, who are the owners of Mrs. Dunster’s Bakery, announced they would acquire the brands and reopen the two Vermont plants and continue the iconic brands.
They were also in line to receive a Vermont Employment Growth Incentive award of $1.8 million. To receive the money they would need to reach intended employment goals.
But creditor KeyBank, according to the Reformer, got a more substantial offer from Flowers to help offset the debt.
KeyBank's Senior Communications Manager Karen Crane told VBM in an email: "KeyBank is not at liberty to make a comment. The terms of the transaction were arranged between the receiver and the purchaser and we are unable to discuss details of client accounts or transactions."
According to the Vermont Department of Labor, 156 workers lost their jobs at Koffee Kup’s Riverside Avenue bakery on Riverside Avenue in Burlington and 91 workers lost their jobs at Vermont Bread’s bakery on Cotton Mill Hill in Brattleboro.
Employees did not have advance warning. Workers who showed up on April 26 were greeted with a closure notice on the door.
Legal action is under way on lost pay and benefits related to the layoffs.
The deal with Flowers presumably will satisfy the paid-time-off claims from employees, according to the Reformer. The state is also looking into whether the owner violated the WARN act, which requires a 60-day notice for large layoffs.
Brattleboro Reformer: Vermont Bread employees to get owed money, but bakery not reopening
VBM: Koffee Kup & Vermont Bread to become family owned and operated
"This acquisition brings brands and production capacity in the Northeast, a key growth market for our company," said Ryals McMullian, Flowers Foods president and CEO. "The Koffee Kup and Vermont Bread Company brands have a strong consumer following in the region and we'll be evaluating their role within our brand portfolio. We have no immediate plans to reopen the bakeries but will be assessing how they may fit our strategic network optimization efforts in the future."
East Baking Company of Holyoke, MA, also had received a VEGI award in early May, before the Hyslops. But the receiver eventually designated the Hyslops as the "preferred buyer," until Flowers came along.
Even though both of them appear to have lost out, East Baking is still interested.
East Baking Company President Jeff McCarroll told Vermont Business Magazine in an email Tuesday morning that, "We are accessing all avenues. We believe there are ways to challenge this."
He added, "The avenue for challenge to this is Clayton and Sherman acts. We believe Flowers and the reciever did this in a ramrod fashion to try to minimize the look at this. If this was a normal purchase FTC would have to ok this. I think that will be brought to forefront soon."
The Federal Trade Commission oversees the Sherman and Clayton antitrust laws. The Clayton Act specifically prohibits mergers and acquisitions where the effect may be to substantially lessen competition, or to create a monopoly.
"We think the story is an important one," McCarroll said. "It effects us as a company for sure, but what Flowers and the receiver are attempting is unconscionable. It will effect people negatively."
KKB was founded in Troy, Vermont in 1940. The company baked breads, English muffins, buns, and donuts that were marketed throughout the Northeast. In 2013, the company acquired Vermont Bread Company, which produced certified organic breads. KKB closed in April 2021.
About Flowers Foods
Headquartered in Thomasville, Ga., Flowers Foods, Inc. (NYSE: FLO) is one of the largest producers of packaged bakery foods in the United States with 2020 sales of $4.4 billion. Flowers operates bakeries across the country that produce a wide range of bakery products. Among the company's top brands are Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, and Tastykake. Learn more at www.flowersfoods.com.
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