Flowers Foods, Inc. ( FLO ) shares are trading lower on Wednesday. The company entered into a deal to acquire Simple Mills for $795 million in cash.

Flowers Foods ( FLO ) secured a $795 million term loan from the Royal Bank of Canada to finance the acquisition.

Following the transaction, Flowers’ proforma total net debt is expected to be around $1.9 billion, with a net debt-to-EBITDA ratio of 3.1x to 3.3x.

Flowers aims to uphold its balanced capital deployment strategy while maintaining its investment-grade debt rating.

The deal, pending customary regulatory approval, is expected to close in the first quarter of 2025.

Synergies: The acquisition of Simple Mills is expected to be immediately accretive to Flowers Foods’ net sales, adjusted EBITDA growth, and adjusted EBITDA margins on a proforma basis.

The deal is also projected to contribute to Flowers’ earnings per share starting in 2026.

Simple Mills is projected to generate 2024 net sales of $240 million, reflecting a 14% growth compared to the previous year.

This acquisition strengthens Flowers’ presence in the better-for-you and snacking segments, boosting its growth and margin potential.

Once completed, Simple Mills will operate as an independent subsidiary under the leadership of founder and CEO Katlin Smith, continuing operations in Chicago, Illinois, and Mill Valley, California.

Ryals McMullian, chairman and CEO of Flowers Foods ( FLO ) said, “With leading market positions and abundant white space for future growth, Simple Mills perfectly fits our strategy of adding compelling brands in better-for-you segments that complement and diversify our existing portfolio.”

As of Oct. 5, 2024, cash and cash equivalents stood at $15.0 million.

Investors can gain exposure to the stock via First Trust Cons. Staples AlphaDEX and VictoryShares US Small Cap High Div Volatility Wtd ETF .

FLO Price Action: Flower Foods shares are down 3.04% at $19.48 at publication Wednesday.

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