J. M. Smucker To Buy Hostess Brands For Around $5.6 Bln In Cash, Share; SJM Down Over 7%

The J. M. Smucker Co. (SJM), a maker of food and beverage products, said on Monday that it has signed a deal to acquire Hostess Brands, Inc. (TWNK), a bakery company, for $34.25 per share in a cash and share transaction, representing a total value of around $5.6 billion, including a debt of $900 million.

Following the news, SJM was trading down by 7.30 percent at $131.38 per share on the New York Stock Exchange.

Post transaction, SJM expects net sales contribution of around $1.5 billion, with an estimated mid-single digit percentage annual growth rate. In addition, the company projects the acquisition to add to its adjusted earnings per share of the first fiscal year.

Mark Smucker, CEO of SJM, said: “We are excited to announce the acquisition of Hostess Brands, which represents a compelling expansion of our family of brands and a unique opportunity to accelerate our focus on delighting consumers with convenient solutions across different meal and snacking occasions…”

The transaction is expected to be closed in the third quarter of the fiscal year to April 30, 2024.

As part of the transaction, SJM, through its wholly owned unit SSF Holdings, Inc., will begin an exchange offer to buy all shares of Hostess at a price of $34.25 per share, consisting of $30 of cash and .03002 of a SJM’s share, to be exchanged for each Hostess share.

The cash portion of the transaction is expected to be funded through a combination of cash on hand, a bank term loan, and long-term public bonds. SJM has secured $5.2 billion in a fully committed bridge financing from Bank of America, N.A. and RBC Capital Markets LLC.

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