Shares of Hostess Brands experienced a significant boost on Monday following the news that J.M. Smucker Co. will be acquiring the renowned maker of Twinkies. The food company, widely recognized for its jams and jellies, reached an agreement to purchase Hostess for approximately $5.6 billion, valuing each share at $34.25, a premium of about 54% compared to the stock's closing price on Aug. 24.
A Lucrative Deal
Under the terms of the acquisition, stockholders will receive $30 in cash along with 0.03002 shares of Smucker common stock for each share of Hostess common stock they currently own. This partnership holds great promise for driving growth and generating substantial value for consumers, customers, and shareholders, as stated by Andy Callahan, the CEO of Hostess.
Smucker Emerges Victorious
In a fierce competition against General Mills, the esteemed maker of Cheerios, J.M. Smucker Co. ultimately emerged as the successful bidder to acquire Hostess Brands. This triumph positions Smucker as the chosen partner in this highly anticipated deal, as reported by The Wall Street Journal over the weekend.
Market Reaction
In response to the news, Hostess witnessed a surge of 17% during premarket trading on Monday, reaching $32.85. Conversely, Smucker's shares experienced a minor decline of 9.3% to $128.44.
A Remarkable Turnaround
This acquisition has the potential to mark a remarkable turnaround for Hostess Brands, a company that has weathered two Chapter 11 bankruptcies in its history. Having returned to the stock market in 2016 after going private, Hostess has demonstrated impressive progress. Notably, sales reached $1.3 billion in 2022, and the stock price has more than doubled over the past five years.
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