Flowers Foods to expand into health-focused snacks with Simple Mills acquisition
Flowers Foods, Inc., a prominent U.S. bakery company, has announced a definitive agreement to acquire Simple Mills for $795 million in cash. This strategic move underscores Flowers Foods’ intention to diversify its product portfolio and strengthen its position in the burgeoning better-for-you snack market.
The acquisition is anticipated to close in the first quarter of 2025, subject to regulatory approval and customary closing conditions. The deal not only expands Flowers’ exposure to the fast-growing health-focused snack segment but also solidifies its commitment to delivering sustainable, minimally processed food products to meet evolving consumer demands.
Why Simple Mills Fits Into Flowers Foods’ Growth Strategy
Based in Chicago, Illinois, Simple Mills has emerged as a leader in the better-for-you snacks category, offering premium crackers, cookies, snack bars, and baking mixes. Founded in 2012 by Katlin Smith, the company is renowned for its focus on nutrient-dense, high-quality ingredients, such as nut, seed, and vegetable flours. This emphasis on clean-label products has garnered a loyal customer base, with distribution in over 30,000 stores nationwide.
Ryals McMullian, chairman and CEO of Flowers Foods, expressed that Simple Mills perfectly aligns with the company’s strategy to diversify its offerings. McMullian highlighted the synergy between Simple Mills’ mission to revolutionize food production and Flowers Foods’ values of sustainability, respect, and inclusion.
“With Simple Mills’ strong market position and significant growth potential, this acquisition is an exciting step forward in our mission to deliver better-for-you options to our customers,” McMullian stated.
Leveraging Market Trends to Expand Presence
The deal highlights Flowers Foods’ broader effort to tap into the booming market for health-conscious snacks. This sector has outpaced the growth of traditional snack categories in recent years, driven by consumer demand for products that prioritize wellness and sustainability. Simple Mills’ net sales grew by an impressive 14% in 2024, reaching an estimated $240 million.
Experts believe the acquisition will help Flowers Foods leverage this momentum by accelerating Simple Mills’ innovation pipeline and expanding its distribution network. Simple Mills’ seasoned management team, led by founder Katlin Smith, will remain in place to ensure the brand maintains its core values and operational independence under Flowers Foods’ ownership.
Financial and Operational Impact
Flowers Foods will finance the transaction through a $795 million term loan secured from Royal Bank of Canada. The company’s proforma total net debt is expected to reach approximately $1.9 billion post-closing, with a net debt-to-EBITDA ratio in the range of 3.1x to 3.3x.
Despite the increase in leverage, Flowers Foods remains committed to preserving its investment-grade credit rating and balanced capital deployment model. The company expects the deal to be immediately accretive to its net sales, adjusted EBITDA, and EBITDA margins. Furthermore, Flowers projects the acquisition will positively impact its earnings per share by 2026.
Enhancing Better-for-You Offerings
The addition of Simple Mills’ product portfolio will significantly bolster Flowers Foods’ presence in the better-for-you segment, which already includes brands like Dave’s Killer Bread and Canyon Bakehouse. On a proforma basis, branded retail sales are expected to constitute 66% of Flowers’ total net sales for 2024.
Simple Mills’ focus on authenticity and innovation presents new opportunities to extend its reach into untapped snack categories. This aligns with Flowers Foods’ proven ability to scale acquired brands, particularly in the health-focused space.
Katlin Smith commented on the transaction, emphasizing the opportunity to amplify Simple Mills’ brand awareness and broaden its distribution footprint. “With Flowers Foods’ support, we are poised to accelerate our growth and continue advancing our mission to create impactful change in the food industry,” she stated.
Strategic Industry Context
The acquisition reflects a growing trend among legacy food companies to invest in disruptive, health-focused brands to adapt to shifting consumer preferences. Flowers Foods’ decision to integrate Simple Mills into its portfolio highlights the increasing importance of sustainability and clean-label offerings in the competitive snack market.
This move positions Flowers Foods to compete more effectively against major players in the better-for-you category, including Mondelez International and Kellogg’s. Analysts predict the deal will allow Flowers to capture greater market share in the health-conscious snack space, which is projected to see sustained growth in the coming years.
Looking Ahead
As the transaction moves toward completion, Flowers Foods plans to ensure a seamless integration process while maintaining Simple Mills’ operational independence. The acquisition marks a significant milestone in Flowers Foods’ strategy to align its portfolio with evolving consumer trends, setting the stage for continued growth in the better-for-you market.
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