Hostess Brands Inc (NASDAQ:TWNK) soared more than 18% after J.M. Smucker (NYSE:SJM) confirmed it had agreed to buy the Twinkies parent company in a US$5.6 billion deal, which is materially more than suggested in the weekend reports.
The deal is priced at $34.25 per share paid in cash and stock, and, Smucker will assume around $900 million of debt attached to Hostess.
Smucker noted that the transaction values Hostess at 17.2x adjusted earnings, based on estimates of 2023 full-year results – dropping to 13.2x including some $100 million of identified synergies.
Through the transaction, Smuckers picks up snack brands including Twinkies, DingDongs, Zingers and the Voortman cookie brands.
Smuckers chief executive Mark Smucker described the deal as “a compelling expansion”.
"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,” Mark Smucker said.
Hostess chief executive Andy Callahan, meanwhile, added: “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.
“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.”
In New York, Hostess stock was up $5.33 or 18.9% changing hands at $33.43.
Smucker shares, meanwhile, fell $9.58 or 6.77% at $132.00.