Why Twinkies Owner Hostess Brands Shares Are Jumping Today

Food and beverage company J.M. Smucker Co SJM is reportedly nearing a deal to acquire Twinkies owner Hostess Brands TWNK for about $4 billion.

The deal is expected to be formally announced today, The Wall Street Journal reported.

Hostess, founded in 1930, has been through two Chapter 11 bankruptcies. 

The company was bought out of liquidation a decade ago by two investment companies and then returned to public markets in 2016 with the ticker TWNK.

The report noted Hostess has been introducing new products in recent years to catch up with the growing demand in America for snacks and has been expanding into sugar-free treats by acquiring Voortman Cookies.

In 2022, Hostess raked in a revenue of $1.358 billion compared to $1.142 billion last year.

SJM reported that net sales, excluding divestiture and foreign currency exchange, increased 21%. Its gross profit increased 19% Y/Y to $654.8 million, and operating income increased 69% to $303.5 million.

SJM expanded its portfolio with a $3.2 billion deal for Big Heart Pet Brands in 2015 and acquired Ainsworth Pet Nutrition for $1.7 billion in 2018. 

Smucker held $241.1 million in cash and equivalents as of July 31, 2023.

Price Action: SJM shares are trading higher by 0.87% at $142.81, and TWNK shares are up 16.4% at $32.70 in premarket on the last check Monday.