JM Smucker to acquire Hostess Brands for $5.6bn

December 2023 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

December 2023 Issue

In a deal that unites two major American snack makers, J.M. Smucker Co. has acquired Hostess Brands, Inc. for approximately $5.6bn, which includes around $900m of net debt.

Under the terms of the definitive agreement, J.M. Smucker will pay Hostess Brands shareholders $34.25 per share in a cash and stock transaction. The transaction – which has been unanimously approved by the boards of directors of both companies – is expected to close in the second quarter of 2024.

The US packaged food industry has seen a recent uptick in mergers as many companies seek to improve volumes by rebranding portfolios after the benefits from price hikes started to fall away.

The acquisition adds Hostess Brands’ iconic snacks and innovation in the sweet baked goods category to J.M. Smucker’s current offering of beloved brands in the attractive categories of coffee, peanut butter, frozen handheld, fruit spreads, dog snacks and cat food categories.

The acquisition of Hostess Brands also offers J.M. Smucker a strong financial profile with a combination of scale and profitability that increases its confidence in delivering on its long-term growth goals and increasing shareholder value.

“Hostess Brands 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, chair of the board, president and chief executive of J.M. Smucker Co. “With this acquisition, we are adding an iconic sweet snacking platform; enhancing our ability to deliver brands consumers love.”

Furthermore, the transaction positions J.M. Smucker to deliver on consumer needs across occasions with greater convenience and selection – the companies’ complementary capabilities driving further growth and innovation. Additionally, approximately 3000 of Hostess Brands’ employees will join J.M. Smucker in conjunction with the transaction.

“We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders,” said Andy Callahan, president and chief executive of Hostess Brands. “Our companies share highly complementary go-to market strategies, and we are very similar in our core business principles and operations.

“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,” continued Mr Callahan. “I am extremely proud of the entire Hostess Brands team for the legacy they created in building a premier snacking company and driving industry leading returns for our investors, and we look forward to continuing to do so as part of The J.M. Smucker Co. family.”

Serving as lead financial adviser to J.M. Smucker is RBC Capital Markets LLC, with BofA Securities serving as financial adviser. Wachtell, Lipton, Rosen & Katz is serving as legal adviser.

“Our organisation 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,” concluded Mr Smucker. “We look forward to this exciting new chapter for The J.M. Smucker Co.”

Fraser Tennant