The J. M. Smucker Co. announced today the signing of a definitive agreement to acquire Hostess Brands, Inc. for $34.25 per share in a cash and stock transaction, representing a total enterprise value of approximately $5.6 billion, which includes approximately $900 million of net debt. This represents an adjusted EBITDA multiple of approximately 17.2x based on the Company’s estimate of Hostess Brands full year 2023 results and an approximate 13.2x multiple when including anticipated run rate synergies of $100 million. The acquisition expands the Company’s offering of beloved brands in growing categories and accelerates its focus on convenient consumer occasions.
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 Emporia, KS; Burlington, ON; Chicago, IL; Columbus, Georgia; Indianapolis, Indiana and Arkadelphia, AR (which is currently under construction) and a distribution facility in Edgerton, KS. Additionally, approximately 3,000 employees will join the Company in conjunction with the transaction.
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 Mark Smucker, Chair of the Board, President and CEO.
“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.”
Andy Callahan, President and CEO of Hostess Brands commented, “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. Today represents another exciting chapter for Hostess Brands as we combine our iconic snacking brands with The J.M. Smucker Co.’s family of beloved brands. We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders. Our companies share highly complementary go-to market strategies, and we are very similar in our core business principles and operations. Above all else, Hostess Brands and The J.M. Smucker Co. share a deep commitment to inspiring moments of joy and satisfaction through our products, and we look forward to continuing to do so as part of The J.M. Smucker Co. family.”
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 million achieved 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.
For more information, visit the company’s official press release.