Smucker Just Bought Hostess For A Whopping $5.6 Billion

Hostess Twinkies
Hostess Twinkies - calimedia/Shutterstock
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According to a press release, the stage has been set for an epic merger of two icons within the snacking industry. In the early months of 2024, J.M. Smucker Co. is expected to finalize its acquisition of Hostess Brands, Inc., which manufactures popular treats like Twinkies, Donettes, Zingers, HoHos, and many others. Smucker will take control of numerous North American manufacturing plants thanks to the merger, as well as assuming control of a Kansas distribution facility.

Andrew P. Callahan, Hostess Brands' president and CEO, said, "We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders." Smucker's president and CEO, Mark Smucker, mirrored this sentiment, stating, "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." While the deal appears to be mutually beneficial for both entities, it's particularly important for Hostess Brands.

Read more: The Ultimate Guide To Snacks In America

Hostess Hopes To Avoid Future Financial Tumult

Smucker's preserves
Smucker's preserves - The Image Party/Shutterstock

Per Reuters, the Smucker-Hostess merger is one of many similar acquisitions occurring hot on the heels of the pandemic. Hostess experienced a revenue increase after raising prices, but many posited that the company could not sustain itself in the current snacking landscape. Hostess was no stranger to financial woes pre-pandemic, either, as the company declared bankruptcy in 2004 and 2012. Along with expanding debt, a lack of new products appeared to be a major issue for the snack company.

The deal has already provided a boost to Hostess, as the company has experienced a 27% increase in share prices since the merger was announced. Conversely, Smucker, best known for its jams and jellies, has seen a 7% decline in share price. This could be because many analysts feel the company paid too much to acquire Hostess Brands. As stated by one analyst working for JPMorgan, "We are very surprised that SJM (or anyone) is paying this amount" when referring to Hostess Brands' $5.6 billion price tag. Only time will tell if the deal is a true success, but snack fans may have some brand-new products to sample soon.

Read the original article on Daily Meal.