Flowers Foods, one of the largest bakery manufacturers in the US, is set to acquire a gluten-free supplier in its home market.

The deal for the Johnstown, Colorado-based bakery firm is expected to close in the fourth quarter subject to regulatory approvals. The transaction price includes a performance-related contingent payment of $5m, or $175m net of future tax benefits of approximately $30m on a net present-value basis, Flowers Foods said in a statement. 

Canyon Bakehouse employs 206 people and owns a new manufacturing facility in Johnstown complete with two production lines. The company was founded by Josh and Christi Skow and Ed Miknevicius in 2009, after Christi was diagnosed with coeliac disease. 

Once the deal is completed, Josh will continue to lead the business as president and CEO, and Christi will serve as brand ambassador. 

Allen Shiver, the president and chief executive of New York-listed Flowers Foods, said: “Canyon Bakehouse is an innovative leader in a growing segment of the bakery category, which closely aligns this acquisition with our strategic goals. 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.”

Flowers Foods said it will fund the acquisition with cash and existing credit facilities, and expects the transaction to be accretive to its fiscal 2020 earnings.  

Canyon Bakehouse has generated compound annual net sales growth of approximately 45% since 2014, and is predicting 2019 sales of around $70m to $80m.

“With Flowers’ national reach, we will be able to bring our gluten-free products to many more consumers,” Josh Skow said.