Mix a peanut butter and jelly with a Twinkie and what do you get? A snack worth $5.6 billion, apparently.
That's the price tag J.M. Smucker Co. paid to acquire Hostess Brands, including debt, with the former paying the latter's shareholders $34.25 per share.
The partnership aligns two legendary grocery store snack brands: Smucker is known for its jellies, Jif peanut butter, Dunkin' coffee products and Uncrustables, while Hostess Brands is known for its Twinkies, Donettes, Ding Dongs and HoHos.
In a release, Smucker's says the deal aligns with its "focus on convenient consumer occasions" and expanding the "family of brands consumers love" in grocery aisles.
"We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders," said Andy Callahan, president and CEO of Hostess Brands. "Our companies share highly complementary go-to market strategies, and we are very similar in our core business principles and operations."
And some agreed, with news of the sale process sparking a surge in Hostess' shares by 19% early Monday. But many of Smucker's investors viewed the sale as too expensive, pushing shares down 7%.
Dunkin' owner Roark Capital acquires Subway for $9.6 billion
Roark also own several other restaurant chains, including Jimmy Johns, Arby's and Buffalo Wild Wings.
The deal between the brands is expected to close in the third quarter of Smucker's current fiscal year, which ends April 30.
Smucker expects the transaction to cut $100 million worth of costs within two years, and achieve about $1.5 billion in annual sales from Hostess, even as the company has seen some struggles in recent years.
The near-century-old company had started selling off parts of its business, including its Little Debbie and Wonder lines, when it filed for bankruptcy in 2012 — its second time after also filing in 2004.
It was passed between a variety of firms after that before going back to the stock market in 2016 through a special purpose acquisition company merger.
In recent years, Hostess has been able to increase revenue continuously, as it's balanced its increasing costs from supply chain issues by raising its prices for consumers. Smucker has also done well with customers in this fashion, even as many consumers reconsider how they're shopping in times of economic confusion.
