SIMPLE MILLS acquired by FLOWERS FOODS

Flowers Foods acquired Simple Mills, the Chicago-based natural foods manufacturer, from founder Katlin Smith, Vestar Capital Partners and the company’s early angel investors, in an all-cash transaction announced on 8 January 2025 and completed on 21 February, at an enterprise value of $500M–1.5bn, an EV/revenue multiple of 2x–6x on net sales of $150–250M. The perimeter covered the entire share capital of Purposeful Foods Holdings, the parent company of Simple Mills. Flowers Foods financed the purchase with a term loan committed by Royal Bank of Canada, later replaced by a bond issue completed on 14 February. The acquisition took its pro-forma net debt to around 1.9 billion dollars and its leverage to between 3.1 and 3.3 times EBITDA, a level the group considered consistent with its investment grade rating. At the time of the deal, Simple Mills sold its products in more than 30,000 natural and conventional stores across the United States, and its net sales had grown 14% over the previous year. The purchase took Flowers Foods beyond bread and baked goods into crackers, cookies, snack bars and baking mixes, categories sitting in the centre aisles of supermarkets rather than in the bakery section, and raised the share of branded retail products in its total sales. It also gave the group a presence in natural food stores, a channel where it had little exposure, while its own direct-store-delivery network offered a route to widen the brand’s distribution in conventional grocery. Simple Mills was to operate as an independent subsidiary, with founder Katlin Smith staying on as chief executive alongside her leadership team. RBC Capital Markets advised Flowers Foods, with Jones Day as legal counsel, while Piper Sandler and Centerview Partners advised Simple Mills, with Ropes & Gray as legal counsel.