JM Smucker Buys Hostess Brands for $5 Billion Amid Bankruptcy

J.M. Smucker is about to be the hostess with the mostess.

The jam giant announced on Monday that it is purchasing Hostess Brands, known as the maker of Twinkies, HoHos, and other packaged baked goods, for a whopping $5.6 billion.

As part of the deal, which valued the company at $34.25 a share, Smucker will take on Hostess’ outstanding debt of about $900 million, according to CNBC. Hostess shareholders can expect to receive $30 in cash and a .03002 share of Smucker’s stock for each Hostess share they own.

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Following the news, Hostess shares grew by 19% in premarket trading.

The deal is expected to solidify in January during Smucker’s fiscal third quarter.

What is the history of the Hostess company?

Hostess has been in business for 94 years, but not without financial hardships.

Created in 1919, the company was owned by Continental Baking Co. until 1995 when Interstate Bakeries Corp. acquired Continental Banking in a $330 million deal, per Fox News.

Under Interstate Bakeries, the company filed for Chapter 11 bankruptcy protection in 2004 and later renamed itself Hostess Brands.

The company filed for bankruptcy in 2012 amid the Bakery Workers union strike and paused production of its products. That was until private equity firms Apollo Global Management and Metropoulos & Co. saved the brand by acquiring the company’s assets, bringing Hostess back to stores in July 2013, per CNN.

Then in 2016, Hostess became an independent publicly traded company following a merger with another private equity firm, Gores Group.

“I am extremely proud of the entire Hostess Brands team for the legacy they created in building a premier snacking company and driving industry-leading returns for our investors,” Andy Callahan, President and Chief Executive Officer of Hostess Brands said in a press release.

“We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers, and shareholders,” Callahan said. “Our companies share highly complementary go-to-market strategies, and we are very similar in our core business principles and operations.”