September 13, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Once best known as being a pioneer in jellies and jams, The J.M. Smucker Co. announced it has agreed to acquire the iconic Hostess Brands through a cash and stock transaction valued at $5.6 billion, including about $900 million of net debt.

This deal will gain J.M. Smucker the Hostess sweet baked goods brands Hostess® Donettes®, Twinkies®, CupCakes, DingDongs®, Zingers®, CoffeeCakes, HoHos®, Mini Muffins and Fruit Pies, along with the Voortman® cookie brand. It also includes manufacturing facilities in Emporia, Kansas; Burlington, Ontario; Chicago, Illinois; Columbus, Georgia; Indianapolis, Indiana and Arkadelphia, Arkansas, a distribution center in Edgerton, Kansas, and approximately 3,000 new employees.

“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,” said Andy Callahan, president and CEO, Hostess Brands. “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.”

For The J.M. Smucker Co. this deal provides multiple benefits: 

~ It expands the company’s current offerings in the attractive categories of coffee, peanut butter, frozen handheld, fruit spreads, dog snacks, and cat food categories with Hostess’ iconic snack and innovation in the sweet baked goods category.

~ It strengthens its financial profile given Hostess’ combination of scale and profitability, generating confidence that it’ll deliver on its long-term growth goals and increased shareholder value. 

~ It also positions it to deliver on customer needs across occasions with greater convenience and selection. Further, J.M. Smucker noted that its and Hostess’ complementary capabilities will drive growth and innovation. 

“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,” said Mark Smucker, chair of the board, president, and CEO, The J.M. Smucker Co. 

“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.”

When J.M. Smucker makes a move, it’s usually a big one. When the company made its first foray into pet food in 2018, it did so by acquiring Ainsworth Pet Nutrition, the parent company of the Rachael Ray Nutrish® brand, through a $1.7 billion deal. 

“Ainsworth Pet Nutrition is an excellent strategic fit for our Company, as the Rachael Ray Nutrish® brand adds another high-growth, on-trend brand to our pet food portfolio,” said Mark Smucker, CEO, at the time. “Their team has done a tremendous job growing this business, building Nutrish into one of the most recognizable premium pet food brands in the United States. We look forward to working with the talented Ainsworth team, as we know their passion for pets runs as deep as ours.” 

Through the deal for Hostess, there will be a net sale contribution of approximately $1.5 billion, accompanied by a mid-single digit percentage annual growth rate. Annual run rate synergies are expected to be achieved within the first two years of ownership and run at about $100 million. The strong cash flow of the combined businesses will enable for rapid deleveraging and reinvestment in the business.

“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,” said Smucker. “We look forward to this exciting new chapter for The J.M. Smucker Co.”

Andy Callahan, president and CEO of Hostess Brands, added, “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.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.