J. M. Smucker (SJM) to Acquire Hostess Brands (TWNK) for $5.6B
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The J. M. Smucker Co. (NYSE: SJM) announced today the signing of a definitive agreement to acquire Hostess Brands, Inc. (NASDAQ: TWNK) for
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
Compelling Strategic Rationale
Benefits of the transaction include the following:
- Expanding Family of Brands Consumers Love: The acquisition adds Hostess Brands iconic snacks and innovation in the sweet baked goods category to the Company's current offering of beloved brands in the attractive categories of coffee, peanut butter, frozen handheld, fruit spreads, dog snacks and cat food categories.
- Accelerating the Company's Convenient Occasion Strategy: The acquisition positions the Company to deliver on consumer needs across occasions with greater convenience and selection. Further, the Company and Hostess Brands complementary capabilities will drive further growth and innovation.
- Strengthening the Company's Financial Profile: Hostess Brands offers a strong financial profile with a combination of scale and profitability that increases the Company's confidence in delivering on its long-term growth goals and increasing shareholder value.
"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
"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. We look forward to this exciting new chapter for The J.M. Smucker Co."
The acquisition strengthens the Company's financial profile and provides shareholders significant value by accelerating growth in convenient consumer occasions. 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 millionachieved 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 Company, through its wholly owned subsidiary SSF Holdings, Inc., will commence an exchange offer to acquire all outstanding shares of Hostess at a price of
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. The Company has secured
The transaction is anticipated to close in the third quarter of the Company's current fiscal year ending
RBC Capital Markets LLC is serving as lead financial advisor to the Company in connection with the transaction. BofA Securities is also serving as financial advisor to the Company. Wachtell, Lipton, Rosen & Katz is serving as the Company's legal advisor.
The Company will host a conference call and webcast with
A listen-only live webcast of the conference call, as well as a replay, can be accessed at investors.jmsmucker.com.
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Create E-mail Alert Related CategoriesCorporate News, Hot Corp. News, Hot M&A, Mergers and Acquisitions
Related EntitiesRBC Capital, Dividend, Earnings, Definitive Agreement, 14D9, FDA, BofA/Merrill Lynch
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