Flowers Foods (FLO) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition adds a scaled, better-for-you snacking platform with strong mainstream appeal and significant growth potential, diversifying category exposure and supporting long-term growth.

• Expands presence in high-growth, health-focused snacking categories, leveraging Simple Mills' brand strength and authenticity.

• Increases branded retail sales to approximately 66% of total net sales on a proforma 2024 basis.

• The deal aligns with a strategy to add compelling brands in better-for-you segments and supports values of sustainability and integrity.

• Cultural fit and shared values between the organizations were key factors in the decision.

Financial terms and conditions

• Total consideration for the acquisition is $795 million in cash, funded by a $795 million term loan from Royal Bank of Canada.

• Pro forma net debt at closing estimated at $1.9 billion, with a net debt-to-EBITDA ratio expected between 3.1x and 3.3x.

• Transaction expected to be immediately accretive to net sales and adjusted EBITDA growth and margins.

• Anticipated to be accretive to earnings per share in 2026, with slight EPS dilution in 2025.

• Management expects to provide more financial details and guidance in early February.

Synergies and expected cost savings

• Minor cost synergies anticipated, mainly from purchasing input costs rather than manufacturing or distribution.

• Main value driver is forward-looking growth, with opportunities to accelerate innovation, expand distribution, and increase product velocities.

• Significant white space for future growth through new segments, categories, and channels.