Hostess Brands surges on $5.6 billion JM Smucker takeover of Twinkie Maker

Updated at 8:23 am EDT

Hostess Brands  (TWNK) - Get Free Report shares soared higher Monday following confirmation that JM Smucker  (SJM) - Get Free Report will pay $5.6 billion in cash and shares for the maker of Twinkies snack cakes, adding to the Jif peanut butter marker's portfolio of packaged food brands.

JM Smucker will pay $30 in cash and and .03002 of its common stock for Hostess Brands, the companies said, valuing the group at $34.25 per share, a 22% premium to its Friday closing price. The deal was unanimously approved by the boards of both companies and is expected to close in April of next year. 

Hostess, which has seen a 27% surge in its share price since reports emerged from Reuters in August that it was exploring sale options, has a market value of around $3.7 billion, around a quarter of the value of JM Smucker, based on Friday's closing share price. The Wall Street Journal said Smucker beat out packaged food rivals General Mills  (GIS) - Get Free Report for the twice-bankrupt Hostess brands.

"We are excited to announce the acquisition of Hostess Brands, which represents a compelling expansion of our family of brands and a unique opportunity to accelerate our focus on delighting consumers with convenient solutions across different meal and snacking occasions," said JM Smucker CEO Mark Smucker.

"With this acquisition, we are adding an iconic sweet snacking platform; enhancing our ability to deliver brands consumers love and convenient solutions they desire; and leveraging the attributes Hostess Brands offers, including its strong convenience store distribution and leading innovation pipeline, combined with our strong commercial organization and consistent retail execution across channels to drive continued growth," he added.

Hostess Brands shares were marked 16.9% higher in pre-market trading to indicate an opening bell price of $32.96 each. JM Smucker shares fell 8.5% to $129.52 each.

Hostess, first formed in 1930, returned to the capital markets in 2016 through a $725 million deal with private equity firm Gores Group. The Lenexa, Kansas-based snack group brought a renewed focus on U.S. and Canada markets, where it generates nearly all of its revenues, thanks in part to a new line of products that target younger consumers. 

Last month, Hostess said revenues for the three months ending in June rose 3.5% from last year to $352.4 million, missing analysts' estimates, despite a series of price increases used to absorb higher inputs costs. 

Still, the group lifted its full-year profit target, to the "higher end" of its previous forecast of $315 million to $325 million, adding it's "well-positioned for attractive shareholder returns as we build a premier, pure-play snacking company."

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