J.M. Smucker (SJM) is expected to buy Hostess Brands (TWNK) in a takeover deal worth $5 billion U.S., according to multiple media reports.
J.M. Smucker, which is known for making jams and Jif peanut butter, has been reportedly circling Hostess, the maker of Twinkies and other snack cakes, for some time now.
Hostess currently has a market capitalization of $3.73 billion U.S. after a nearly 27% rise in its share price since late August when rumors of a takeover first surfaced.
The deal value of approximately $5 billion U.S. would exclude Hostess' net debt of about $900 million U.S., according to media reports.
Mergers and acquisitions among U.S. packaged food companies have been on the rise this year as sales fade coming out of the pandemic and as benefits from price hikes lose steam.
Recent deals have included Campbell Soup’s (CPB) $2.7 billion U.S. purchase of sauce maker Sovos Brands (SOVO) and Unilever’s (UL) acquisition of frozen yogurt company Yasso, which gave it premium ice-cream brand Ben & Jerry's. Terms of that deal weren’t disclosed.
Based in Kansas, Hostess has been a going concern since 1930 and makes several iconic snack cakes, including Ho-Hos, Ding Dongs, and Zingers.
Despite its strong portfolio of brands, Hostess has filed for bankruptcy twice in the past, in 2004 and again in 2012, due to high debt levels.
J.M. Smucker, which also makes coffee and pet food, currently has a market capitalization of more than $14 billion U.S.
Shares of Hostess jumped 15% higher on news of the takeover deal. Its stock is now up more than 40% on the year at $28.11 U.S. per share.
The stock of J.M. Smucker was flat on news of its Hostess acquisition. Year-to-date, J.M. Smucker’s share price is down 11% and trading at $141.58 U.S. per share.
