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Flowers bakes deal with Canyon
Posted on Thursday, 08 November 2018 15:23
Flower Foods is going gluten-free, buying Canyon Bakehouse, a privately-held US baking business for around USD 205.00 million, or USD 175.00 million net of future tax benefits of USD 30.00 million on a net present value basis.
The consideration comprises a contingency payment of USD 5.00 million dependent on the company meeting performance targets, and will be funded through a combination of cash and the buyer’s existing credit facilities.
A deal expands Flowers’ product range to include gluten-free cakes, muffins, as well as other speciality items, and will enhance Flower’s distribution network, whilst increasing Canyon’s client base across the country.
The transaction is expected to complete in the fourth quarter of 2018, subject to the usual raft of approvals.
Formed in 2009, Canyon specialises in gluten-free baking following co-founder Christi Skow being diagnosed with celiac disease, an allergic immune condition directly related to gluten consumption.
Canyon’s range of products include breads, buns, bagels, English muffins, and has 206 employees based in its recently constructed production site in Johnstown.
It has predicted sales of USD 70.00 million to USD 80.00 million for 2019, and upon closing of the deal, co-founder Josh Skow will head the business as president.
Allen Shiver, chief executive of the buyer, said the transaction was part of its strategy to increase its presence within the emerging baking market of allergy-free products.
The trend towards gluten-free food is expected to grow significantly in the next few years, with data provided by Statista stating that the market is set be worth USD 7.59 billion by 2020.
Headquartered in Thomasville, Georgia, the buyer operates over 47 bakeries across the US, producing fresh buns, rolls and other snacks that it can distribute through its direct-store deliver network.
Its brands include Butternut, Bunny Bread, European Bakers, and Nature’s Own.
In the third financial quarter ending 6th October 2018, Flowers posted sales of USD 3.07 billion, up from USD 3.04 billion million in the corresponding period of 2017.
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