J.M. Smucker to buy Twinkies maker Hostess for $5.6 billion

J.M. Smucker Co. agreed to acquire Twinkies maker Hostess Brands Inc. for about $5.6 billion, furthering a growing consolidation trend among the companies that stock the shelf-stable aisles at the heart of supermarkets. 

Investors will get $34.25 in cash and stock for each Hostess Brands share, according to a statement on Monday. The price, which includes $900 million in debt, represents a 22% premium to Hostess’ closing price on Sept. 8.

The announcement comes just over a month after news of another major packaged-food acquisition: Campbell Soup Co. said it would buy Sovos Brands Inc. in a $2.7 billion deal in early August. While consumers rushed back to the center of grocery stores during the pandemic, and revenue from packaged food had stayed elevated thanks to higher prices, consumers are now returning to healthier, fresher foods at the perimeter of the store. 

Companies now are likely to either innovate to keep consumer attention or acquire new brands. A June report from Goldman Sachs said growth would moderate across the industry, and specifically called Campbell and Smucker “at risk.”

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Founded in 1930, Hostess owns U.S. household snack brands including Donettes, Ding Dongs and Zingers as well as a variety of Voortman cookies and wafers.

Shares of Hostess Brands have surged more than 26% since before Aug. 25, when Reuters reported the company was exploring a sale after fielding takeover interest from major snack food makers. The firm had a market value of about $3.7 billion as of the end of last week.

Hostess shares rose 17% to $32.85 in early trading, while Smucker sank 11%. Smucker had already fallen 11% this year, giving it a market value of $14.5 billion.

J.M. Smucker was founded in 1897 by Jerome Monroe Smucker, selling homemade cider and apple butter door to door from the back of his horse-drawn wagon. The company, now run by the fifth generation of the Smucker family, is best known for its namesake jam and jelly, Folgers coffee and Jif peanut butter. It also makes Carnation evaporated milk and Milk-Bone dog treats.

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The Orrville, Ohio-based company in 2015 bought Big Heart Pet Brands Inc. in a cash-and-stock deal worth $5.8 billion. Three years later, it deepened its foray into pet food by acquiring Ainsworth Pet Nutrition.

In an interview with Bloomberg in June, CEO Mark Smucker said the company specialized in modernizing brands.

—Bloomberg News