Snacks & Candy

The J. M. Smucker Co. to Acquire Hostess Brands

Rationale includes expanding iconic consumer brands, accelerating convenience strategy
hostess twinkies
Photograph: Shutterstock

Twinkies, DingDongs and HoHos maker Hostess Brands Inc. has a new owner again. The J. M. Smucker Co., through its wholly owned subsidiary SSF Holdings Inc., has signed a definitive agreement to acquire Hostess Brands for $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.

The acquisition expands Smucker’s offering of well-known brands in growing categories and accelerates its focus on convenient consumer occasions, the company said.

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, along with manufacturing facilities in Emporia, Kansas; Burlington, Ontario; Chicago; Columbus, Georgia; Indianapolis; and Arkadelphia, Arkansas (which is currently under construction) and a distribution facility in Edgerton, Kansas.

Additionally, approximately 3,000 employees will join Smucker in conjunction with the transaction.

“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, chair of the board, president and CEO.

Smucker’s and Hostess Brands’ complementary capabilities will drive further growth and innovation. Benefits of the transaction include:  

  • Expanding Family of Brands Consumers Love: The acquisition adds Hostess Brands' iconic snacks and innovation in the sweet baked goods category to Smucker’s current offering of brands in the categories of coffee, peanut butter, frozen handheld, fruit spreads, dog snacks and cat food.
  • Accelerating the Company’s Convenient Occasion Strategy: The acquisition Smucker to deliver on consumer needs across occasions with greater convenience and selection.
  • Strengthening the Company’s Financial Profile: Hostess Brands offers a strong financial profile with a combination of scale and profitability that increases Smucker’s confidence in delivering on its long-term growth goals and increasing shareholder value.

“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. 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, Mark Smucker added.

“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. 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,” said Andy Callahan, president and CEO of Hostess Brands, Lenexa, Kansas. “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.”

Financial highlights of the transaction include:

  • Net sales contribution of approximately $1.5 billion, with an estimated mid-single digit percentage annual growth rate.
  • Annual run-rate cost synergies of approximately $100 million achieved within the first two years of ownership.
  • Adjusted earnings per share expected to be accretive in the first fiscal year.
  • Strong cash flow of combined business enables rapid deleveraging, while continuing to reinvest in the business.

The price tag represents an adjusted earnings before interest, taxes, depreciation and amortization (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.

The cash portion of the transaction is expected to be funded through a combination of cash on hand, a bank term loan and long-term public bonds. The transaction is not subject to a financing condition. Smucker has secured $5.2 billion in a fully committed bridge financing from Bank of America N.A. and RBC Capital Markets LLC. Pro forma total net debt estimated at the closing date will be approximately $8.6 billion and the pro forma total net debt-to-EBITDA ratio is expected to be approximately 4.4x. Smucker intends to maintain its balanced capital deployment model, along with an investment-grade debt rating.

The companies expect the transaction—approved by both boards—to close in the third quarter of Smucker’s current fiscal year ending April 30, 2024.

Orrville, Ohio-based Smucker offer consumer products in the coffee, consumer foods, dog snacks and cat food categories under brands including Folgers, Dunkin’, Café Bustelo, Jif, Smucker’s Uncrustables, Smucker’s, Milk-Bone and Meow Mix.

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