Shares of Hostess Brands Inc. shot up into record territory Monday after the Twinkies and HoHos maker announced an agreement to be acquired by J.M Smucker Co. in a cash-and-stock deal valued at $5.6 billion.
The stock TWNK, +0.86% jumped 17.9% in premarket trading, to put it on track to open well above the current record close of $28.74 on Nov. 8, 2022. Shares of J.M. Smucker, with food brands including Folgers, Smuckers and Meow Mix, dropped 8.4% toward a 14-month low.
Under the terms of the deal, Hostess shareholders will receive $30.00 in cash and 0.03002 J.M. Smucker shares — valued at $4.25 at Friday’s closing price — for each Hostess share they own. That values Hostess shares at $34.25 each, which represents a 21.8% premium to Friday’s closing price of $28.11.
“We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders,” said Hostess Chief Executive Andy Callahan.
The deal is expected to close in the third quarter of J.M. Smucker’s fiscal year, which ends April 30, 2024. The Wall Street Journal had reported over the weekend that a deal was near.
Hostess shares had rallied 25.3% year to date through Friday and J.M. Smucker’s stock had dropped 10.7%, while the S&P 500 SPX, +0.14% has gained 16.1%.