Smucker to buy a Twinkies maker hostess

Jelly maker JM Smucker has bought Twinkie owner Hostess Brands for $5.6 billion, or $34.25 per share.

Hostess shareholders will receive $30 in cash and 0.03002 shares of Smucker stock for every Hostess share they own. Smucker also agreed to assume Hostess’s debt of approximately $900 million. The deal is expected to close in Smucker’s fiscal third quarter, which ends in January.

The Smucker purchase is the latest in a series of deals by Big Food, which is looking for growth as pandemic gains wane. Campbell’s Soup Company recently announced the acquisition of Rao’s pasta sauce owner Sovos Bands for $2.7 billion. M&M owner Mars bought Kevin’s Natural Foods in July. Unilever acquired the Yasuo frozen yogurt brand in June.

Shares of Hostess rose 18% in pre-market trading Monday following the announcement. Smoker’s stock fell 7.5%.

As of Friday’s close, Hostess shares were up 25% this year, giving the company a market value of $3.73 billion. But the company’s shares have already received a big boost after Reuters mentioned In late August, it was considering a sale after getting interest from major food companies, including PepsiCo and Oreo maker Mondelez International.

Hostess has seen demand for Twinkies and Ding Dongs decline after raising prices to mitigate rising commodity costs, sparking investor concern and takeover interest from larger rivals. Over the course of the entire year, the company expects its volume to decline. Executives paused the price hike.

Its sale to Smucker ends Hostess’ seven-year streak as an independent, publicly traded company. Hostess went public through a merger with a special purpose acquisition company in 2016.

Just three years ago, Apollo Global Management and Metropoulos & Co. revived the company, ending a multi-month Twinkie drought, after acquiring the assets of the company formerly known as Interstate Bakeries.