J.M. Smucker has a major sugar craving. The jam maker is buying Twinkies owner Hostess Brands for $5.6 billion, according to an early Monday announcement. SJM stock retreated during trade while TWNK stock soared more than 19%.
J.M. Smucker will pay $34.25 per share for the treats maker. Hostess Brands shareholders will receive $30 cash and 0.03002 shares of SJM stock for each share of TWNK they own. Smucker will also assume Hostess' roughly $900 million in debt.
The deal was unanimously approved by the boards of both companies and is expected to close in Smucker's third quarter that ends in April.
In addition to Twinkies, Hostess Brands snacks include CupCakes, Ding Dongs, Zingers and HoHos, as well as Voortman Bakery cookies. The company generated more than $1 billion in sales annually since 2020, growing to $1.36 billion in 2022.
"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," CEO Andy Callahan said in the release. "Today represents another exciting chapter for our company."
Hostess Brands was created as a privately held entity in 2013, after the bankruptcy of Interstate Bakeries and Hostess Brands. It went public in 2016, in an IPO valuing the company at around $2.3 billion.
J.M. Smucker CEO and Board Chair Mark Smucker said, "With this acquisition, we are adding an iconic sweet snacking platform; enhancing our ability to deliver brands consumers love and convenient solutions they desire."
Smucker plans to leverage Hostess' convenience store distribution and innovative snacks pipeline.
Twinkies, SJM Stock
SJM stock tumbled 7% Monday. Smucker shares were trading in a flat base prior to the announcement. SJM stock has fallen 17% since Dec. 31.
Hostess Brands stock spiked 19.14% Monday, pushing above the 29 buy point for a consolidation, MarketSmith data shows. Twinkies stock leapt more than 49% in 2023 through Monday's close.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison.
