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J.M. Smucker nears $5 Bn deal to acquire Twinkies’ owner Hostess Brands

J.M. Smucker nears $5 Bn deal to acquire Twinkies’ owner Hostess Brands
J.M. Smucker nears $5 Bn deal to acquire Twinkies’ owner Hostess Brands

The Jif peanut butter manufacturer J.M. Smucker has reportedly announced its plan purchase Hostess Brands, the company behind Twinkies snack cakes, for an estimated $5.6 billion. The transaction's valuation, however, does not include Hostess' net debt, which stands at approximately $900 million.

Hostess, with a market capitalization of approximately $3.73 billion, based on LSEG data, has experienced a nearly 27% surge in its stock price since August 25, following reports that the company was exploring a sale in response to takeover interest from major food corporations.

Mark Smucker, Chair of the Board, President, and CEO of J.M. Smucker, expressed excitement about the acquisition of Hostess Brands, characterizing it as a significant expansion of their brand portfolio and a rare chance to enhance their commitment to satisfying consumers with convenient solutions for various meal and snack occasions.

Notably, the packaged food industry in the United States has witnessed a wave of mergers as pandemic-related gains diminish and the benefits of price increases begin to plateau. Recent notable transactions include Campbell Soup's $2.7 billion acquisition of Sovos Brands, the maker of Rao's sauce, Unilever's purchase of Yasso, a premium frozen yogurt brand in North America, and Mars, the maker of Snickers, acquiring Kevin's Natural Foods, a producer of healthy foods.

Hostess attracted acquisition interest after implementing price increases on select products to boost revenue, which raised concerns among investors about its future prospects.

For the record, Hostess, headquartered in Lenexa, Kansas, was founded in 1930. It boasts several notable household brands such as Zingers, Ding Dongs, Voortman cookies & wafers, and Ho-Hos.

The company filed for bankruptcy on two occasions, first in 2004 and then in 2012, largely due to private equity owners burdening it with debt and failing to introduce new snacks that resonated with consumers. Meanwhile, J.M. Smucker, having coffee and pet food brands under its umbrella, has a market value surpassing $14 billion.

As per the expert opinion, the acquisition of Hostess Brands will enable J.M. Smucker to expand the portfolio of consumer loved brands, accelerate the convenient occasion strategy, and strengthen the financial profile.

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Saloni Walimbe

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