J.M. Smucker to acquire sweet snacks company Hostess Brands for $5.6bn

The J.M. Smucker Co. (NYSE: SJM) announced the signing of a definitive agreement to acquire Hostess Brands, Inc. (NASDAQ: TWNK) for a total enterprise value of approximately $5.6 billion, which includes around $900 million of net debt. The deal is set at $34.25 per share in a cash and stock transaction. Based on estimated full-year 2023 results for Hostess Brands, the acquisition reflects an adjusted EBITDA multiple of about 17.2x and an approximate 13.2x multiple when accounting for anticipated run rate synergies of $100 million.

What the Acquisition Entails

The deal incorporates Hostess Brands’ sweet baked goods including Hostess Donettes, Twinkies, and CupCakes, along with the Voortman cookie brand. Additionally, manufacturing facilities in multiple locations across the United States and Canada are part of the transaction, as is a distribution facility in Kansas. The acquisition will also see approximately 3,000 Hostess employees joining the J.M. Smucker Co.

J.M. Smucker Co. to expand brand family with $5.6bn Hostess Brands buyout. Photo courtesy of The J.M. Smucker Co./PRNewswire.

Benefits of the Deal for J.M. Smucker Co.

The acquisition serves multiple strategic goals for the J.M. Smucker Co. It expands the company’s current portfolio of brands in growing categories including coffee, peanut butter, and pet food. Moreover, the acquisition aims to fulfill consumer needs for more convenient options and a broader selection of products. Hostess Brands is expected to strengthen the J.M. Smucker Co.’s financial profile, enhancing the company’s confidence in achieving long-term growth and shareholder value.

Mark Smucker, Chair of the Board, President and CEO, stated, “We are excited to announce the acquisition of Hostess Brands, which represents a compelling expansion of our family of brands.” Andy Callahan, President and CEO of Hostess Brands, also expressed his enthusiasm about joining the J.M. Smucker Co.’s family of brands.

The transaction has received unanimous approval from the boards of directors of both companies and is expected to close in the third quarter of J.M. Smucker Co.’s current fiscal year ending April 30, 2024.