v3.25.2
Acquisition
 6 Months Ended
Jul. 12, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisition

5. ACQUISITION

On February 21, 2025, we completed the acquisition of 100% of the equity interests of Purposeful Foods Holdings, Inc., the parent company of Simple Mills, Inc., for total consideration of approximately $848.6 million, which includes $17.8 million payable to the sellers upon realization of certain tax benefits acquired as part of the transaction. Simple Mills, a market-leading natural brand offering premium better-for-you crackers, cookies, snack bars, and baking mixes, expands the company's presence in the better-for-you snacking category. The acquisition has been accounted for as a business combination. The total goodwill recorded for the acquisition was $367.9 million and is not deductible for tax purposes.

The following table summarizes the preliminary fair value of purchase consideration paid for Simple Mills and the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed based on their estimated fair value. The goodwill, identifiable intangible assets, taxes, and certain other assets and liabilities are still under review. When relevant information is obtained, resulting changes to our provisional purchase price allocation are adjusted to reflect new information obtained about the facts and circumstances that existed as of the respective acquisition date that, if known, would have affected the measurement of the amounts recognized as of those dates. We recognized a $19.0 million goodwill measurement period adjustment related to the valuation of trademarks and customer relationships, deferred taxes and assumed liabilities during the second quarter of Fiscal 2025. The impact to

the amortization expense on the Condensed Consolidated Statements of Income is immaterial for the twelve and twenty-eight weeks ended July 12, 2025 (amounts in thousands):

 

 

 

Initial Preliminary
Allocation

 

 

Measurement Period
Adjustments

 

 

Updated Preliminary
Allocation

 

Fair value of consideration transferred:

 

 

 

 

 

 

 

 

 

Cash consideration paid at closing

 

$

830,713

 

 

$

—

 

 

$

830,713

 

Payable to seller

 

 

17,824

 

 

 

48

 

 

 

17,872

 

Total consideration

 

$

848,537

 

 

$

48

 

 

$

848,585

 

 

 

 

 

 

 

 

 

 

Recognized amounts of identifiable assets
   acquired and liabilities assumed:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

38,833

 

 

$

—

 

 

$

38,833

 

Accounts receivable, net of allowances

 

 

18,065

 

 

 

—

 

 

 

18,065

 

Inventories

 

 

19,612

 

 

 

—

 

 

 

19,612

 

Property, plant, and equipment

 

 

1,729

 

 

 

—

 

 

 

1,729

 

Operating lease right-of-use assets

 

 

1,668

 

 

 

—

 

 

 

1,668

 

Customer relationships

 

 

173,100

 

 

 

4,700

 

 

 

177,800

 

Trademarks - infinite-lived

 

 

334,300

 

 

 

21,100

 

 

 

355,400

 

Other financial assets

 

 

1,936

 

 

 

—

 

 

 

1,936

 

Total identifiable assets acquired

 

$

589,243

 

 

$

25,800

 

 

$

615,043

 

Current maturities of operating leases

 

 

1,172

 

 

 

—

 

 

 

1,172

 

Accounts payable

 

 

14,702

 

 

 

—

 

 

 

14,702

 

Other financial liabilities

 

 

7,621

 

 

 

274

 

 

 

7,895

 

Deferred income taxes, net

 

 

104,098

 

 

 

6,450

 

 

 

110,548

 

Total liabilities assumed

 

$

127,593

 

 

$

6,724

 

 

$

134,317

 

Total identifiable net assets acquired

 

$

461,650

 

 

$

19,076

 

 

$

480,726

 

Goodwill

 

$

386,887

 

 

$

(19,028

)

 

$

367,859

 

 

Property, plant and equipment in the table above includes machinery and equipment and leasehold improvements.

The following table presents the acquired intangible assets subject to amortization (amounts in thousands, except amortization periods):

 

 

 

Total

 

 

Amortization years

 

Amortization Method

Customer relationships

 

$

177,800

 

 

17

 

Straight-line

Trademarks

 

 

355,400

 

 

Indefinite

 

N/A

Total intangible assets

 

$

533,200

 

 

 

 

 

 

Acquisitions Pro Forma

Simple Mills contributed net sales of $61.4 million and $85.7 million and net loss of $2.1 million and $6.3 million, which includes interest and amortization expense, net of tax impact, for the twelve and twenty-eight weeks ended July 12, 2025, respectively. The following table provides the supplemental pro forma net sales and net income of the combined entity had the acquisition date of Simple Mills been December 31, 2023, the first day of Fiscal 2024 (amounts in thousands):

 

 

For the Twelve Weeks Ended

 

 

For the Twenty-Eight Weeks Ended

 

 

July 12, 2025

 

July 13, 2024

 

 

July 12, 2025

 

July 13, 2024

 

Net sales

$

1,242,835

 

 

$

1,282,398

 

 

$

2,832,952

 

 

$

2,912,401

 

Net income attributable to Flowers Foods

$

60,746

 

 

$

59,503

 

 

$

119,457

 

 

$

111,529

 

 

We incurred costs of $2.0 million in the fourth quarter of Fiscal 2024 and additional costs of $0.9 million and $14.6 million during the twelve and twenty-eight weeks ended July 12, 2025, respectively, related to the acquisition. These costs are reflected in the selling, distribution, and administrative expenses line item of the Condensed Consolidated Statements of Income and are reflected in the pro forma net income. The pro forma financial information also includes the following adjustments (net of tax based on statutory rates) related to the acquisition: amortization of the intangible assets and interest expense for the additional indebtedness incurred to finance

the acquisition that would not have been incurred without the transaction. These adjustments increased the pro forma net income attributable to Flowers Foods by $2.4 million and $6.8 million for the twelve and twenty-eight weeks ended July 12, 2025, respectively, and decreased pro forma net income by $12.5 million and $37.3 million for the twelve and twenty-eight weeks ended July 13, 2024, respectively.