The maker of Jif peanut butter, Smuckers jelly and Folgers coffee is expanding its snack food empire to include the producer of the iconic Twinkie in a $5.6 billion deal that will see Hostess Brands bought by J.M. Smucker, the company said Monday.
The J. M. Smucker Co. will buy Hostess for $34.25 per share in a cash and stock sale that includes the latter company’s $900 million of net debt, Smuckers said in its announcement.
The deal, which represents a 51% premium over Hostess’ $3.73 billion market cap, comes with seven manufacturing and distribution facilities in six states and Canada, 3,000 employees and the brands Hostess, Donettes, Twinkies, CupCakes, DingDongs, Zingers, CoffeeCakes, HoHos, Mini Muffins, Fruit Pies and Voortman cookies.
Sheares of J. M. Smucker Co. fell 8.6% to $129.36 in the first five minutes of trading Monday, while Hostess was up 18.9% to $33.42.
Hostess has seen its shares jump nearly 27% since late August, when Reuters first reported the company was exploring a sale to interested parties that included Hershey Co,. General Mills and PepsiCo.
The invention of the Twinkies sponge cake put Hostess, a Kansas-based company, on the map in 1930. Sno Balls, Ding Dongs and Ho Hos followed. Its parent company, Continental Baking Co., sold Hostess to Interstate Bakeries Corporation in 1995 and, in 2012, IBC became “Hostess Brands.” The next year, Hostess Brands filed for bankruptcy and was taken over by Apollo Global Management—founded by billionaires Leon Black, Josh Harris and Marc Rowan— and C. Dean Metropoulos and Company, headed by Greek billionaire Charles Dean Metropoulos. In 2016, Hostess Brands went public in a deal that valued it at $2.3 billion. Hostess had a second quarter net revenue of $352.4 million, up 3.5% from the same time last year, the company reported. Known commonly as Smuckers, the J. M. Smucker Co. was first founded as a maker of apple butter and has since expanded to include food, coffee and pet food brands Dunkin, Folgers, Jif, Milk-Bone and Meow Mix, among others. The company went public in 1959 and now has a market cap of $14.46 billion.
1 million. That’s how many Twinkies Hostess was making per day in 2015.
The Hostess-Smuckers deal is the latest in a string of food mergers. Campbell Soup bought Sovos Brands, the maker of Rao’s sauce, for $2.7 billion last month and Yasso, a Greek frozen yogurt brand, sold to Unilever for an undisclosed amount in June. Last year, several major food deals closed, including Mondelēz International’s $2.9 billion purchase of Clif Bar, and Ferrero Group spent an undisclosed amount to buy Wells Enterprises, the maker of Halo Top, Bomb Pop, Blue Ribbon Classics and Blue Bunny ice cream products.
The term “Twinkie defense” was coined in 1979 when Dan White went on trial for the murder of San Francisco Mayor George Moscone and gay rights activist Harvey Milk. White’s defense claimed that over consumption of Twinkies and other sugary snacks was evidence he was suffering from depression, which caused him to act irrationally. White was convicted of manslaughter and sentenced to just under eight years in prison.