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J.M. Smucker has finalized agreements to acquire Hostess Brands for $5.6 billion, including debt.

Smucker, known for Jif peanut butter, intends to pay Hostess shareholders $34.25 per share, a cash-and-stock offer which exhibits a 54% premium on Hostess’s stock since the day it was reported the company was considering a sale. Hostess’s stock value increased significantly following this report, with shares going up by 27% and trading at $33.49 on Monday morning.

Meanwhile, Smucker’s shares experienced a decline of 7%, as the investment community deemed the acquisition overpriced. The Deal is projected to finalize in the third quarter of Smucker’s ongoing fiscal year.

The acquisition comes at a substantial 17.2 times EBITDA multiple based on Hostess’s estimated financials for 2023. Comparatively, recent transactions in the industry have seen lower multiples; Campbell Soup’s purchase of Sovos Brands stands at 14.6 times EBITDA inclusive of run rate savings. Industry analysts from JPMorgan expressed skepticism about the high price of the transaction, stating, “we are very surprised that SJM (or anyone) is paying this amount.” Despite reservations, this move comes as numerous U.S. packaged food corporations are making efforts to enhance their brand collections amidst decreasing pandemic-era profits.

The sector has witnessed a surge in mergers in recent times as companies strive to augment volumes through rebranding, a strategy adopted post the diminution of benefits garnered from price elevations. Hostess, whose portfolio includes notable names like Ho-Hos, Ding Dongs, and Zingers, had emerged as an attractive acquisition option after revenue escalation prompted by price augmentations, despite a continual decrease in volume growth.


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