PHILADELPHIA - A Georgia food company announced a $34.4 million cash deal Monday to acquire Tasty Baking Co., the iconic maker of Tastykakes and other packaged sweets that earlier this year was forced by financial difficulties to explore a merger or sale.

Thomasville, Ga.-based Flowers Foods Inc., which makes breads, buns, rolls, snack cakes, pastries, and tortillas, is paying $4 a share for Tasty Baking's 8.6 million shares outstanding. The price is more than double Tasty Baking's closing price Friday of $1.61 a share.

In midday trading Monday, Tasty Baking shares jumped $2.36 to $3.97. Flowers Foods shares rose 2.6 percent, or 73 cents, to $28.39.

Including assumed debt, the companies say the deal is worth $165 million.

The boards of both companies have unanimously approved the deal, according to a statement, and the acquisition is expected to close in the second quarter.

Philadelphia-based Tasty, whose line of packaged sweets includes Kandy Kakes and Krimpets, will become part of Flowers' direct-store-delivery business. Founded in 1914, Tasty Baking is one of the most well-known brands in the City of Brotherly Love and employs about 740 people in the Philadelphia region.

In January, Tasty Baking said "unanticipated operational challenges" related to its new bakery in Philadelphia's Navy Yard had lowered projected savings for the fourth quarter of 2010 by $3 million to $10 million, and that it was looking into a possible merger or sale. It also cited a bankruptcy filing by the owner of the A&P, Super Fresh and Pathmark grocery chains and rising commodity costs as contributing factors to the financial squeeze.

Lovers of the company's pies, cakes and other sweets had fretted for months about the company's fate, hoping that the financial strains would not put an end to sweets many say are rivaled only by the cheesesteak as a Philadelphia food.