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Smucker’s to buy Twinkie maker Hostess in $5.6 billion deal


JM Smucker — the 126-year-old maker of fruit spreads, Jif peanut butter and Folgers coffee — announced on Monday that it will acquire Twinkie maker Hostess Brands in a $5.6 billion deal.

Smucker will acquire baked treats including Twinkies, Devil Dogs and Hostess Cupcakes, according to terms of the deal. Smucker is also acquiring the health-conscious Voortman Cookie brand, which Hostess bought in January 2020 when it expanded its sugar-free treat offerings.

About 3,000 Hostess employees will join Smucker as part of the cash-and-stock transaction, Smucker said in a Monday press release. The merger is set to close by April 2024.

Smucker’s said buying up Hostess and its sweet treats will “enhance the company’s net sales growth, operating margins and earnings growth.”

The company, which recently reported earnings for the first quarter of its 2024 fiscal year ended July 31, saw net sales increase 21% year over year, to $67.8 million.


JM Smucker announced on Monday that it will acquire Hostess Brands in a $5.6 billion stock and cash transaction set to close by April 2024.
Alamy Stock Photo

Smucker’s Chief Executive Mark Smucker attributed “key growth platforms of coffee, snacking and pet” to its year-over-year growth.

Hostess has weathered a rocky path during its 104 years in business, experiencing two bankruptcies before nearing this multibillion-dollar sale.

Both Chapter 11 bankruptcies, which happened in 2004 and 2014, were attributed to the company’s failure to come up with new snacks.

In 2014, Hostess — which also makes Wonder Bread — laid off more than 18,000 workers after announcing that it no longer had the dough to operate, would close all of its factories and would no longer be producing Twinkies.

However, two investment firms bought the then-struggling company out of liquidation in a $410 million purchase, far less than the $2.3 billion private equity tycoon C. Dean Metropoulos and Leon Black’s Apollo Global Management originally tried to sell their brand for.

The deal, which closed in 2015, returned the tasty cream-filled golden spongecakes to grocery store shelves after an eight-month hiatus.

Hostess then returned to public markets in November 2016 under the ticker TWNK, and in recent years has consistently reported increased sales after raising the prices on some of its products.

In its most recent quarterly earnings report for the three months ended June 30, Hostess saw a 35% increase in net revenue year over year, to $352.4 million, and a nearly 12% increase in total profits since the same period in 2022, at $126 million.

In the past five years, the Lenexa, Kan.-based company’s share price has soared nearly 130%, to $28.11.

Its share price has advanced over 20% in the past month alone thanks to rumors of its Smucker’s acquisition.


Smucker's marmalade and Blueberry preserves seen for sale in a store in Manhattan, New York City, U.S., November 22, 2021.
Since it was founded in 1987, Smucker’s has expanded its portfolio greatly to include pet food, coffee and pre-made peanut butter and jelly sandwiches.
REUTERS

In premarket trading on Monday, just after the Smucker’s-Hostess deal was announced, Smucker’s was enjoying a share price of $141.58, up nearly 1% from Friday’s closing bell.

Smucker’s has a history of doing deals to expand its portfolio.

The brand — which started in 1987 with just one product, apple butter — bought its way into the pet-food business in 2015 thanks to a $3.2 billion deal with Big Heart Pet Brands, the maker of Milk-Bone dog treats and Meow Mix cat food.


Box of Twinkies
Hostess, the company behind the beloved Twinkies snack cakes, has filed for Chapter 11 bankruptcy twice, in 2004 and 2014.
Christopher Sadowski

Three years later, Smucker’s acquired Ainsworth Pet Nutrition, which carries a cat food line created by Rachael Ray, for $1.7 billion. It now boasts a portfolio of 40-plus brands that are on the shelves of 90% of US homes, Smucker’s touts on its website.

Representatives for Hostess did not immediately respond to The Post’s request for comment. A Smucker’s spokesperson declined to comment beyond the company’s press release on the acquisition.



This story originally appeared on NYPost

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