J.M. Smucker said on Monday it will acquire Hostess Brands in a deal worth approximately $5.6 billion, or $34.25 a share.
Smucker will take ownership of noted baked goods like Twinkies, CupCakes, DingDongs, Zingers and HoHos. The company also agreed to assume roughly $900 million of Hostess’ debt.
“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,” Hostess Brands CEO Andy Callahan said.
Smucker said the deal is expected to close in the third quarter of its current fiscal year and represents an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about 17.2 times based on its estimate of Hostess Brands 2023 results.
Smucker, which also houses coffee and pet food brands, has a market valuation of over $14 billion and had raised prices of its jams and jellies, which helped boost its profit forecast for the year.
The combined cash flow of the companies is expected to enable rapid deleveraging and reinvestment into the business, according to a press release.
Reuters contributed to this report