Smucker deal sends food stock Hostess Brands up 20%

Hostess Brands Inc (NASDAQ: TWNK) opened roughly 20% up on Monday after J M Smucker Co (NYSE: SJM) said it will buy the bakery company for about $5.6 billion.

Hostess Brands stock valued at a premium

The definitive agreement announced today translates to $34.25 per share – of which $30 will be paid in cash and the remaining in stock.

Other notable names interested in acquiring Hostess Brands included General Mills. According to Andy Callahan – its Chief Executive Officer:

“We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders.”

Last month, the Nasdaq-listed firm reported revenue for its second financial quarter that came in shy of Street estimates. Hostess Brands stock is now up 50% versus the final week of August.

Smucker will assume Hostess Brands’ debt

Smucker expects this transaction which also includes about $900 million that Hostess has in debt to close by January of 2024. Mark Smucker – its Chief Executive Officer said today in a press release:

Acquisition represents a compelling expansion and unique opportunity to accelerate focus on delighting consumers with convenient solutions across different meal and snacking occasions.

Shares of J M Smucker Co are down nearly 7.0% at writing. Note that Hostess Brands has faced bankruptcy not once but twice – first in 2004 and then in 2012.

In August, peer Campbell Soup also said it will buy premium sauces company Sovos Brands Inc for about $2.7 billion as Invezz reported here.