Editor’s note: Update: J.M. Smucker confirms deal to buy Hostess Brands for $5.6bn

J.M. Smucker is approaching a deal to buy fellow US food manufacturer Hostess Brands, media reports in the country say.

The Wall Street Journal and Reuters have reported the two sides are nearing an agreement.

According to the WSJ, which first reported the news yesterday (10 September), a deal worth around $4bn could be finalised today.

Reuters, citing unnamed sources, a transaction valued at close to $5bn – but excluding Hostess’ debt – was near to being agreed.

Last month, shares in Twinkies maker Hostess soared after Reuters reported the company had appointed advisers to mull takeover interest from a clutch of major packaged food companies.

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Anonymous sources then told the news agency companies including Mondelez International, Hershey, General Mills and PepsiCo had expressed interest in buying Hostess.

Just Food approached PepsiCo, Mondelez, Hershey, General Mills – and Hostess– for comment. At the time of writing, only Hershey had responded. “It’s our policy not to comment on M&A speculation,” a spokesperson said.

In the wake of the Reuters report, analysts at Morgan Stanley said Hostess would offer “varying strategic benefits to potential buyers” and suggested the company would be a “good strategic fit for larger snacking companies including Mondelez and Hershey”.

In August, Hostess booked a 3.8% in half-year net revenue to $697.8m. During the six months to 30 June, the company’s operating income was up 13.3% at $123.8m. Net income was 8.8% higher at $70.8m.

In 2022, Hostess generated net revenue of $1.36bn, up 18.9% on a year earlier. The group’s operating income grew 9.7% year on year to $220.3m. Net income was up 37.6% at $164.2m.

J.M. Smucker, which did not feature in the Reuters report last month, owns Jif peanut butter, Folgers coffee and Meow Mix cat food. The company also sells Uncrustables frozen snacks.

In February, J.M. Smucker offloaded a group of pet-food brands to another US food manufacturer, Post Holdings, for $1.2bn.