Vestar Completes the Sale of Simple Mills

Rhea-AI Summary

Vestar Capital Partners has completed the sale of Simple Mills, a premium better-for-you food brand, to Flowers Foods (NYSE: FLO) for $795 million. Vestar, which provided the first institutional investment in October 2019, was Simple Mills' largest shareholder.

During Vestar's five-year investment period, Simple Mills achieved consistent double-digit topline growth through various initiatives including: expanded distribution channels, annual new product launches, increased marketing and R&D investments, and strengthened supply-chain operations through improved co-manufacturing and supplier networks.

The transaction validates Vestar's investment thesis centered on the growing better-for-you foods market segment. Simple Mills' product portfolio includes crackers, cookies, snack bars, and baking mixes. Piper Sandler and Centerview Partners acted as financial advisors, while Kirkland & Ellis LLP served as legal counsel to Vestar.

Positive

• Flowers Foods (FLO) acquires Simple Mills for $795 million enterprise value
• Simple Mills demonstrated consistent double-digit topline growth
• Successful expansion of distribution channels and annual product launches

Negative

• None.

Insights

Financial Analyst

The $795 million acquisition of Simple Mills marks a transformative move for Flowers Foods, significantly strengthening its position in the premium better-for-you snacks category. This strategic acquisition represents approximately 20.6% of FLO's market capitalization, indicating a substantial bet on the premium segment.

The deal's strategic rationale is compelling for several reasons: First, Simple Mills' consistent double-digit growth and annual product innovation cycle demonstrate strong operational execution and market acceptance. Second, the brand's established presence in premium channels complements FLO's traditional distribution network, creating immediate cross-selling opportunities.

The transaction's enterprise value likely reflects a premium multiple, justified by Simple Mills' growth profile and margins typical of premium better-for-you brands (generally 15-20% higher than conventional products). The acquisition provides FLO with immediate scale in the faster-growing premium segment, where consumers demonstrate higher brand loyalty and less price sensitivity.

Key value creation opportunities include:

• Leveraging FLO's extensive distribution network to accelerate Simple Mills' growth
• Utilizing Simple Mills' R&D capabilities and consumer insights to drive innovation across FLO's portfolio
• Optimizing the combined supply chain network to improve operational efficiency
• Cross-pollinating marketing expertise between premium and mainstream segments

Integration risks appear manageable given Simple Mills' established co-manufacturing model and FLO's experience in managing multiple brands. The transaction positions FLO to capture a larger share of the premium snacking category, which has been growing at roughly twice the rate of conventional segments.

NEW YORK, Feb. 24, 2025 /PRNewswire/ -- Vestar Capital Partners, a leading U.S. middle-market private equity firm, announced today it has completed the sale of Simple Mills (or "the Company"), a premium brand of better-for-you crackers, cookies, snack bars, and baking mixes, to Flowers Foods, Inc. (NYSE: FLO) for a total enterprise value of $795 million. Vestar provided the first institutional investment into the brand in October 2019, and was the Company's largest shareholder.

"This positive outcome validates Vestar's original investment thesis, including the ongoing shift toward better-for-you foods, as well as our strong conviction in what we believed to be the unique potential of the Simple Mills brand," said Vestar Managing Director Kevin Mundt, who also served as Chairman of the Board of Simple Mills. "Vestar was proud to partner with the skilled Simple Mills management team, who have a pulse on what consumers want, to improve the strategic positioning of the brand and help the company realize consistent double-digit topline growth throughout our investment. We wish Simple Mills well as it embarks on its next chapter."

Over its five-year investment, Vestar, in collaboration with the Simple Mills leadership team, drove meaningful value creation across the Company. Under Vestar's ownership, Simple Mills expanded its distribution channels; supported new product innovation, including launching one major new product per year; invested meaningfully in marketing and R&D; and strengthened its supply-chain via solidifying the Company's co-manufacturing and supplier network, among other accomplishments.

"Simple Mills is another example of Vestar's long-time approach partnering with founder-owned businesses. Our aim is to steer our companies' growth and profitability positioning them for a strong future, while also generating an attractive realization for our management partners and Limited Partners," said Dan O'Connell, Founder and CEO of Vestar. "We believe Flowers Foods is a great home for Simple Mills, and we look forward to watching the Company's continued success."

Piper Sandler and Centerview Partners served as the financial advisors and Kirkland & Ellis LLP served as legal counsel to Vestar on the transaction.

About Vestar Capital Partners
Vestar Capital Partners is a leading U.S. middle-market private equity firm specializing in management buyouts and growth capital investments. Vestar invests in and collaborates with incumbent management teams and private owners to build long-term enterprise value, with a focus on Consumer, Business & Technology Services and Healthcare. Since inception in 1988, Vestar funds have invested over $12 billion in 94 companies – as well as more than 200 add-on acquisitions – with a total value of approximately $61 billion. For more information on Vestar, please visit www.vestarcapital.com.

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View original content:https://www.prnewswire.com/news-releases/vestar-completes-the-sale-of-simple-mills-302383002.html

SOURCE Vestar Capital Partners

FAQ

How much did Flowers Foods (FLO) pay for Simple Mills?

Flowers Foods (FLO) acquired Simple Mills for a total enterprise value of $795 million.

What products does Simple Mills bring to Flowers Foods' portfolio?

Simple Mills brings a premium line of better-for-you crackers, cookies, snack bars, and baking mixes to Flowers Foods' portfolio.

When did Vestar Capital Partners initially invest in Simple Mills?

Vestar Capital Partners made their first institutional investment in Simple Mills in October 2019.

What growth did Simple Mills achieve under Vestar's ownership?

Under Vestar's ownership, Simple Mills achieved consistent double-digit topline growth through expanded distribution, new product launches, and strengthened supply chain operations.

Who were the financial advisors for the FLO-Simple Mills transaction?

Piper Sandler and Centerview Partners served as financial advisors, while Kirkland & Ellis LLP served as legal counsel to Vestar on the transaction.