Flowers Foods, Inc. has announced its acquisition of Simple Mills for $795 million in cash, a move that is expected to enhance Flowers Foods' growth and diversify its revenue base. Simple Mills, founded in 2012, is a market-leading natural brand offering premium better-for-you crackers, cookies, snack bars, and baking mixes. In 2024, Simple Mills generated net sales of $240 million, representing 14% growth compared to the previous year.
The acquisition is anticipated to be immediately accretive to net sales and adjusted EBITDA growth, as well as adjusted EBITDA margins on a proforma basis. Additionally, the transaction is expected to be accretive to Flowers Foods' earnings per share in 2026.
Flowers Foods has entered into a binding commitment letter for a $795 million term loan from Royal Bank of Canada to help fund the transaction. Proforma total net debt estimated at the closing date will be approximately $1.9 billion, and the proforma total net debt-to-EBITDA ratio is expected to be in the range of 3.1x to 3.3x.
Upon closing, Simple Mills will operate as an independent subsidiary of Flowers Foods and continue to be led by founder and CEO Katlin Smith and her leadership team. Simple Mills will maintain its operations in Chicago, Illinois and Mill Valley, California.
The acquisition is aimed at enhancing growth prospects, diversifying category exposure, and bolstering Flowers Foods' financial profile. The company expects the transaction to broaden distribution, accelerate innovation, and amplify brand awareness for Simple Mills.
Flowers Foods, Inc., headquartered in Thomasville, GA., is one of the largest producers of packaged bakery foods in the United States, with 2023 net sales of $5.1 billion. The company's top brands include Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, and Tastykake.
Simple Mills, on the other hand, is a leading provider of better-for-you crackers, cookies, snack bars, and baking mixes made with simple and nutritious high-quality ingredients. The brand has disrupted center-aisle grocery categories to become the leading cracker, cookie, and baking mix brand in the natural channel, and the leading natural cracker brand in MULO with distribution in over 30,000 stores nationwide. The market has reacted to these announcements by moving the company's shares -1.2% to a price of $19.86. If you want to know more, read the company's complete 8-K report here.
