We investigate the effects of messenger-matter mixing on the lightest CP-even Higgs boson mass m_h in gauge-mediated supersymmetry breaking models. It is shown that with such mixings m_h can be raised to about 125 GeV, even when the superparticles have sub-TeV masses, and when the gravitino has a cosmologically preferred sub-keV mass. In minimal gauge mediation without messenger-matter mixing, realizing m_h = 125 GeV would require multi-TeV SUSY spectrum. The increase in $m_h$ due to messenger-matter mixing is maximal in the case of messengers belonging to 10+bar{10} of SU(5) unification, while it is still significant when they belong to $5+bar{5}$ of SU(5). Our results are compatible with gauge coupling unification, perturbativity, and the unification of messenger Yukawa couplings. We embed these models into a grand unification framework with a U(1) flavor symmetry that addresses the fermion mass hierarchy and generates naturally large neutrino mixing angles. While SUSY mediated flavor changing processes are sufficiently suppressed in such an embedding, small new contributions to K^0-bar{K^0} mixing can resolve the apparent discrepancy in the CP asymmetry parameters sin2beta and epsilon_K.
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