By Gary Symons
TLL Editor in Chief
The J. M. Smucker Co. (NYSE: SJM) announced today the signing of a definitive agreement to acquire Hostess Brands, Inc. (NASDAQ: TWNK) in a $5.6 billion transaction.
The planned acquisition marks a major development in the snack category of the food and beverage industry, as Hostess is among the best known brands in the sector.
Smucker says it will pay $34.25 per share in a cash and stock transaction, representing a total enterprise value of approximately $5.6 billion, which includes approximately $900 million of net debt.
“We are excited to announce the acquisition of Hostess Brands, which represents a compelling expansion of our family of brands and a unique opportunity to accelerate our focus on delighting consumers with convenient solutions across different meal and snacking occasions,” said Mark Smucker, who is the chair of the Board, president and CEO.
This represents an adjusted EBITDA multiple of approximately 17.2x based on the company’s estimate of Hostess Brands full year 2023 results, and an approximate 13.2x multiple when including anticipated run rate synergies of $100 million. Smuckers says the acquisition is intended to expand the its offering of beloved brands in growing categories, and accelerates its focus on convenient consumer occasions.
Hostess is best known for its variety of baked goods, including the iconic Twinkies brand. Their lines include popular products like CupCakes, DingDongs, Zingers, CoffeeCakes, HoHos, Mini Muffins and Fruit Pies and the Voortman cookie brand. The deal includes the purchase of manufacturing facilities in Emporia, Kansas; Burlington, Ontario; Chicago, Illinois; Columbus, Georgia; Indianapolis, Indiana; and Arkadelphia, Arkansas, and a distribution facility in Edgerton, Kansas.
The deal will also see approximately 3,000 new employees now working with J.M. Smucker.
Smucker says his desire to join Hostess with his family’s long-established company was based on the strength of its brand, its wide distribution, and its history of innovation in developing new food items for the market.
“With this acquisition, we are adding an iconic sweet snacking platform; enhancing our ability to deliver brands consumers love and convenient solutions they desire; and leveraging the attributes Hostess Brands offers, including its strong convenience store distribution and leading innovation pipeline, combined with our strong commercial organization and consistent retail execution across channels to drive continued growth,” Smucker explained. “Our organization is well positioned to deliver on the great potential our expanded family of brands offers, as has been reflected by our history of growth through acquisition and the successful integration of new categories to our business.”
Smucker also said J.M. Smucker and Hostess Brands have complementary capabilities that will drive further growth and innovation.
Hostess president and CEO Andy Callahan says the deal is far from the end of Hostess Brands as a major force in the food and beverage sector, and in fact, will result in further growth.
“Today represents another exciting chapter for Hostess Brands as we combine our iconic snacking brands with The J.M. Smucker Co.’s family of beloved brands,” Callahan said. “We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders.
“Our companies share highly complementary go-to market strategies, and we are very similar in our core business principles and operations,” Callahan explained. “Above all else, Hostess Brands and The J.M. Smucker Co. share a deep commitment to inspiring moments of joy and satisfaction through our products, and we look forward to continuing to do so as part of The J.M. Smucker Co. family.”
The J.M. Smucker Co. is best known for coffee, consumer foods, dog snacks and cat food categories, including many of the most popular brands in North America. Those include, for example, Folgers coffee, Dunkin’ (under license), Café Bustelo, Jif, Milk-Bone, Meow Mix, and of course, the Smucker’s jams and jellies that made the name famous.
