Smucker’s Acquires Hostess for $5.6B
J.M. Smucker Co. has purchased Hostess Brands Inc., the maker of Twinkies snack cakes, for approximately $5.6 billion in cash and stock, including $900 million in debt.
The company will pay $34.25 per share, consisting of $30 in cash and .03002 of a share of its stock, which is worth $4.25 based on the company’s stock closing price last Friday.
The transaction’s cash element is expected to be backed by a combination of cash on hand, a bank term loan, and long-term public bonds. Bank of America, N.A. and RBC Capital Markets LLC have provided J.M. Smucker with $5.2 billion in bridging financing.
Based on the company’s assessment of Hostess Brands’ full-year 2023 performance, the purchase represents an adjusted EBITDA multiple of approximately 17.2x, and an approximate 13.2x multiple when considering projected run rate synergies of $100 million.
The transaction includes the Hostess Brands sweet baked goods brands (Hostess Donettes, Twinkies, CupCakes, DingDongs, Zingers, CoffeeCakes, HoHos, Mini Muffins and Fruit Pies) and the Voortman cookie brand.
Additionly, manufacturing facilities in Emporia, KS; Burlington, Ontario; Chicago, IL; Columbus, GA; Indianapolis, IN and Arkadelphia, AK, which is currently under construction, and a distribution facility in Edgerton, KS are included in the deal.
Hostess, based in Lenexa, Kansas, has seen its share price rise 27% since Reuters reported in August that it was exploring sale possibilities, and has a market value of nearly $3.7 billion, or around one-quarter the value of JM Smucker.
The acquisition is anticipated to strengthen JM Smucker’s existing portfolio by integrating Hostess Brands’ snacks and sweet baked goods innovation to the company’s current line-up of brands in the coffee, peanut butter, frozen handhelds, fruit spreads, dog treats, and cat food categories.
The transaction follows a string of others, including Campbell Soup’s $2.7 billion acquisition of Rao’s sauce maker Sovos Brands and Unilever’s acquisition of luxury frozen yogurt brand Yasso in North America.
The deal is expected to close in the third quarter of 2024.