By Anirban Sen, Greg Roumeliotis and Dimpal Gulwani
(Reuters) – Jif peanut butter maker JM Smucker is nearing a deal to buy Hostess Brands, the owner of Twinkies snack cakes, for nearly $5 billion, sources familiar with the matter said on Sunday.
The deal value excludes Hostess’ net debt of about $900 million, the sources told Reuters, requesting anonymity because the matter is confidential.
Hostess has a market capitalization of about $3.73 billion, according to LSEG data, following a nearly 27% rise in shares since Aug. 25, when Reuters reported the company was exploring a sale after attracting takeover interest from major food makers.
Hostess and JM Smucker did not immediately respond to Reuters’ request for comment outside regular business hours. The Wall Street Journal first reported on a possible deal.
U.S. packaged food companies have seen an increase in mergers, amid waning pandemic-era fortunes and as the benefits of price increases begin to fade.
Among recent deals, Campbell Soup closed a $2.7 billion deal for Rao’s sauce maker Sovos Brands, Unilever bought premium frozen yogurt brand Yasso in North America, while Snickers maker Mars acquired health food maker Kevin’s Natural Foods.
Hostess became a takeover target after it raised prices on some of its products to boost sales, fueling investor concerns about its prospects.
Based in Lenexa, Kansas, Hostess was founded in 1930 and is behind several iconic household brands, including Ho-Hos, Ding Dongs, Zingers and Voortman cookies and waffles.
The company filed for bankruptcy twice, in 2004 and 2012, because a combination of private equity owners saddled it with debt and failed to come up with new snacks that appealed to consumers.
JM Smucker, which also houses coffee and pet food brands, has a market value of more than $14 billion.
Following an industry-wide trend, the Orrville, Ohio-based company had also raised prices on its products such as jams, jellies and pet food, boosting its profit forecast for the year.
(Reporting by Dimpal Gulwani in Bengaluru and Anirban Sen; Editing by Rashmi Aich and Savio D’Souza)
