J.M. Smucker Nears Deal to Buy Hostess
Deal marrying Twinkies owner with jelly maker could be finalized by Monday
Twinkies owner Hostess Brands TWNK 0.86%increase; green up pointing triangle is closing in on a sale to J.M. Smucker SJM 0.88%increase; green up pointing triangle, a move that would marry the two big names in snacks.
A deal, likely worth something in the neighborhood of $4 billion, could be announced as soon as Monday, assuming the talks don’t hit a last-minute snag, according to people familiar with the matter.
Smucker prevailed in a heated competition with General Mills, parent of Cheerios and Betty Crocker.
A sale would cap off a remarkable turnaround for Hostess, which has been through two Chapter 11 bankruptcies. Two investment firms bought the company out of liquidation a decade ago, returning Twinkies to store shelves after an eight-month absence.
Hostess then returned to the public markets in November 2016, under the ticker symbol TWNK. Its market value currently stands at about $3.7 billion, boosted by a Reuters report last month that the company was exploring a sale.
Based in Lenexa, Kan., Hostess was founded in 1930 and is behind several brands in addition to Twinkies, including Ho-Hos and Ding Dongs.
In recent years, the company has doubled down on America’s growing appetite for snacks, rolling out new products including Bouncers, golf-ball-size versions of Twinkies, Ding Dongs and Donettes, and expanding into sugar-free treats through the acquisition of Voortman Cookies.
Hostess’s sales topped $1.3 billion in 2022, up from $1.1 billion in the prior year, as it raised prices on some of its products. The company’s stock has more than doubled in the past five years, far outpacing the S&P 500 and other big food companies.
Besides its signature jellies, Ohio-based Smucker’s brands include Jif peanut butter and Folgers coffee, Milk-Bone dog treats and frozen, crustless sandwiches known as Uncrustables that have lately gained in popularity.
In August, Smucker reported that its comparable sales for the quarter ended July 31 were up 21% from the prior year, driven by higher prices and sales volumes.
Smucker has a history of doing deals to expand its portfolio and gain new pockets of growth. Its foray into pet food began in 2015 with a $3.2 billion deal for Big Heart Pet Brands, the maker of Milk-Bone dog treats and Meow Mix cat food. It later acquired Ainsworth Pet Nutrition for $1.7 billion in 2018.
Recently, Smucker has gotten a boost from strong coffee demand. The company said in August that consumers are still getting their caffeine fixes at home after spending on at-home brewing systems during the pandemic. Although offices and cafes have reopened, consumers’ new work and lifestyle habits have made at-home coffee consumption standard, it said.
Smucker said at an industry conference last week it would be interested in scooping up new businesses, potentially in coffee, pet snacks or new categories.