Flowers Foods to Acquire Canyon Bakehouse

Flowers Foods has announced a definitive agreement to acquire Canyon Bakehouse LLC, a privately held, gluten-free baking company based in Johnstown, Colorado, for approximately USD205m (including a performance-based contingent payment of USD5m), or USD175m net of future tax benefits of approximately USD30m on a net present value basis.

Canyon Bakehouse offers a line of 21 gluten-free breads, buns, bagels, English muffins, and specialty items. Almost 90% of its sales are distributed frozen through natural, specialty, grocery, and mass retailers around the country, with the remainder sold fresh. The Canyon Bakehouse brand is the top gluten-free loaf brand in natural and specialty food stores, the number-two brand in the overall gluten-free loaf category and the fastest-growing gluten-free bread loaf brand in the U.S, according to IRI Custom Database MultiOutlet.

The company was founded by Josh and Christi Skow and Ed Miknevicius in 2009, after Christi Skow was diagnosed with celiac disease. Canyon Bakehouse now employs 206 people and operates in a recently constructed 165,625sqf bakery with two production lines in Johnstown. After the transaction, Josh Skow will continue to lead the business as president and Christi Skow will serve as brand ambassador.

“Canyon Bakehouse is an innovative leader in a growing segment of the bakery category, which closely aligns this acquisition with our strategic goals. They have great products, a talented team of employees, a state-of-the-art gluten-free bakery, and a brand with an enthusiastic fan following. We see opportunities to leverage Flowers Foods’ distribution network and retail partnerships to drive growth by bringing Canyon Bakehouse products to more consumers across the country. We look forward to welcoming Josh, Christi and the rest of Canyon Bakehouse’s employees to the Flowers team,” said Allen Shiver, Flowers’ president and chief executive officer.

Canyon Bakehouse CEO and Founder Josh Skow said:  “Since the beginning, the mission of Canyon Bakehouse has been to help those who have given up gluten to Love Bread Again. (…) We are now very excited about the opportunities for our company alongside Flowers Foods. With Flowers’ national reach, we will be able to bring our gluten-free products to many more consumers.  Flowers shares our passion for baking and they understand what makes our company and our products unique. We look forward to joining the Flowers Foods family.”

Canyon Bakehouse has generated a compound annual net sales growth rate of approximately 45% since 2014. According to IRI and SPINS data, the gluten-free packaged bread category has grown at a compound annual growth rate of 6.6% per year since 2015, outperforming the broader USD14.5bn retail baked goods market. The company has anticipated 2019 sales of approximately USD70m to USD80m.

The acquisition, which is subject to regulatory approval and customary closing conditions, is expected to be completed later in the fourth quarter of 2018.