Shares of Hostess Brands Inc. (TWNK) surged 16.7% to a record high following the announcement of its acquisition by J.M. Smucker Co. (SJM) in a cash and stock deal worth $5.6 billion. However, J.M. Smucker’s shares saw an 11.0% decline ahead of the market open.
Under the agreement, Hostess shareholders will receive $30.00 in cash and 0.03002 J.M. Smucker shares for each Hostess share they own. This values each Hostess share at $34.25, presenting a significant 21.8% premium to Friday’s closing price of $28.11.
The acquisition is expected to be finalized during the third quarter of J.M. Smucker’s fiscal year, which concludes on April 30, 2024. Reports from The Wall Street Journal had already hinted at the possibility of this deal over the weekend.
Hostess Chief Executive Andy Callahan expressed confidence in the partnership, stating that it will generate growth and deliver substantial value for consumers, customers, and shareholders.
Shares of Hostess Brands had already climbed 25.3% year-to-date by Friday, while J.M. Smucker’s stock had experienced a 10.7% decline. In contrast, the S&P 500 had recorded a solid 16.1% gain.