Buckle up, dessert aficionados! In a deal worth a whopping $5.6 billion, J.M. Smucker, the famed jelly maker, is diving headfirst into the snack universe by acquiring the beloved Twinkie connoisseur, Hostess Brands. It’s a match made in indulgent heaven!
Picture this: Hostess shareholders are set to enjoy a slice of the pie (or rather, a Twinkie) with each share they hold. They’ll pocket $30 in cold, hard cash and also secure a slice of Smucker’s stock worth 0.03002 shares for each Hostess share they own. To sweeten the deal even further, Smucker is taking on Hostess’s debts, which ring in at a whopping $900 million. Talk about a financial feast!
But hold onto your snack cakes; the excitement doesn’t stop there! This deal is anticipated to wrap up right around the time we welcome the New Year, closing in Smucker’s fiscal third quarter, which ends in January. Get ready to savor the sweet taste of change!
Smucker’s acquisition is the latest chapter in the Big Food saga, where industry giants are on the prowl for new opportunities as the pandemic-induced surge in demand starts to simmer down. Campbell’s Soup recently stirred the pot with its $2.7 billion acquisition of Sovos Brands, the brains behind Rao’s pasta sauce. And let’s not forget Mars, the proud owner of M&M’s, who snatched up Kevin’s Natural Foods earlier this year. Unilever also dived into the game by picking up the frozen yogurt sensation, Yasso, in June.
If you’re wondering about the stock market’s reaction, Hostess shares soared a whopping 18% in premarket trading on Monday after this delectable announcement. Meanwhile, Smucker’s stock took a slight dip, falling 7.5%. But, as any seasoned investor knows, the market’s appetite can be unpredictable!
Before this deal entered the picture, Hostess’s stock had already been on quite the rollercoaster ride, surging 25% this year alone, leading to a market value of $3.73 billion. Rumor had it that this iconic snack brand was considering a sale, attracting the attention of big players like PepsiCo and Oreo’s parent company, Mondelez International, thanks to a Reuters report in late August. It seems the allure of Twinkies is irresistible!
Hostess’s journey took a turn when the demand for their signature Twinkies and Ding Dongs waned due to price hikes aimed at offsetting rising commodity costs. Investors raised an eyebrow, and larger competitors saw an opportunity. To ease concerns, Hostess paused those price hikes, and now, they’ve found a new home with Smucker.
This acquisition marks the end of Hostess’s seven-year stint as an independent, publicly traded company. They originally went public through a merger with a special purpose acquisition company in 2016. Remember the Twinkie drought? That ended when Apollo Global Management and Metropoulos & Co. breathed new life into the brand, rescuing the assets of the company once known as Interstate Bakeries just three years earlier.
So there you have it: the delightful story of Smucker’s big bite into the world of Twinkies and Ding Dongs. A sweeter future awaits, as these two iconic brands unite to bring more joy to snack lovers everywhere!
