Hostess Brands, Inc., has entered into a definitive agreement with The J.M. Smucker Co. to acquire all of the outstanding shares of Hostess Brands in a cash and stock transaction valued at $34.25 per Hostess Brands share, representing a transaction value of approximately $5.6 billion, including the assumption of debt.
Under the terms of the agreement, Hostess Brands shareholders will receive $30 in cash and 0.03002 shares of The J.M. Smucker Co. common stock (valued at $4.25 as of Sept. 8, 2023) for each share of Hostess Brands common stock. The purchase price represents a premium of approximately 54 percent to the closing price of $22.18 on Aug. 24, the last trading day prior to press reports of a potential transaction.
Andy Callahan, president and chief executive officer of Hostess Brands commented, “I am extremely proud of the entire Hostess Brands team for the legacy they created in building a premier snacking company and driving industry leading returns for our investors. Today represents another exciting chapter for our company as we combine our iconic snacking brands with The J.M. Smucker Co.’s family of beloved brands.
“We believe this is the right partnership to accelerate growth and create meaningful value for consumers, customers and shareholders. Our companies share highly complementary go-to market strategies, and we are very similar in our core business principles and operations. Above all else, Hostess Brands and The J.M. Smucker Co. share a deep commitment to inspiring moments of joy and satisfaction through our products, and we look forward to continuing to do so as part of The J.M. Smucker Co. family.”
“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 Mark Smucker, chair of the board, president and chief executive officer of The J.M. Smucker Co. “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 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.
“Our organization is well positioned to deliver on the great potential our expanded family of brands offers, as has been reflected by our history of growth through acquisition and the successful integration of new categories to our business. We look forward to this exciting new chapter for The J.M. Smucker Co.”
Under the terms of the agreement, The J.M. Smucker Co., through its wholly owned subsidiary SSF Holdings, Inc., will commence an exchange offer to acquire all outstanding shares of Hostess Brands. Stockholders will receive $30 in cash and 0.03002 shares of The J.M. Smucker Co. common stock for each share of Hostess Brands common stock.
The closing of the exchange offer will be subject to certain conditions, including the tender of at least a majority of the outstanding shares of Hostess common stock and other customary closing conditions, including receipt of required regulatory approvals. Upon the successful completion of the exchange offer, The J.M. Smucker Co. will acquire all of the remaining shares of Hostess Brands common stock that were not acquired in the exchange offer through a second-step merger for the same consideration per share as paid in the exchange offer.
The cash portion of the transaction is expected to be funded through a combination of cash on hand, a bank term loan and long-term public bonds.
Both The J.M. Smucker Co. and Hostess Brands boards of directors have unanimously approved the transaction. The transaction is anticipated to close in the third quarter of The J.M. Smucker Co.’s current fiscal year ending April 30.
Morgan Stanley & Co. LLC and Morgan, Lewis & Bockius LLP are serving as financial and legal advisors, respectively, to Hostess Brands.
Hostess Brands, Inc. is a premier snacking company with a portfolio of iconic brands; Hostess Brands makes America’s No. 1 cupcake, mini donut and zero sugar cookie brands. With annual sales of $1.4 billion and approximately 3,000 dedicated team members, Hostess Brands produces new and classic snacks, including Hostess Donettes, Twinkies, CupCakes, Ding Dongs and Zingers, as well as a variety of Voortman cookies and wafers.
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A group of leading Islamic scholars has advised GOOD Meat, the cultivated meat division of food technology company Eat Just, Inc., that real meat made from cells, without raising and slaughtering animals, can be halal if production meets certain criteria. Answering this theological question is a meaningful step forward for international acceptance of cultivated meat since halal consumers represent about 25 percent of the world’s population.
This landmark Shariah opinion from a trio of well-respected scholars in Saudi Arabia comes as cultivated meat begins to enter commerce in the United States and consumers around the world are learning how meat made in this new way can help address global food systems challenges connected to climate change, food safety, food security and animal welfare. With the Muslim population rapidly increasing, so too is their meat consumption. The global halal meat market was a $202 billion business in 2021 and is estimated to reach $375.05 billion by 2030, according to some estimates.
The Shariah scholars reviewed documentation prepared by GOOD Meat and attorneys at AlDhabaan & Partners in association with Eversheds Sutherland that described how cultivated chicken, the company’s first product, is made. The panel studied details about how the cells are sourced and selected, the ingredients fed to the cells to stimulate growth, how the cells are harvested and how finished products are manufactured.
GOOD Meat also engaged the Halal Product Advisory, a division of Halal Product Development Company, a fully owned subsidiary of the Public Investment Fund of Saudi Arabia, to advise and assist the company with the official process for halal pre-certification in Saudi Arabia and globally.
The scholars concluded that cultivated meat can be halal under the following conditions:
GOOD Meat’s chicken cell line and production process that were approved by regulators in the U.S. and Singapore do not yet meet the above criteria, however, with this clarity the company will work on a process to meet the halal guidelines moving forward.
“If cultivated meat is to help address our future food system needs, it has to be an option for the billions of people around the world who eat halal. This landmark ruling provides much needed clarity on how to ensure that is achieved. All companies should work to build a process to meet these guidelines,” said GOOD Meat co-founder and CEO Josh Tetrick.
The above ruling is a positive sign for cultivated meat companies that want to serve areas of the world with large Muslim populations, like the Middle East. In fact, a recent poll of more than 2,000 consumers in six key Middle East countries found that a vast majority of respondents would purchase cultivated meat and switch to it from conventional meat, assuming it was halal, sold at a comparable cost and tasted the same as what they are used to. The GOOD Meat-commissioned study released at last year’s United Nations Climate Change Conference polled consumers in Saudi Arabia, Qatar and other countries in the region.
In the poll conducted by PSB Insights, a leading independent consulting firm, climate messaging was one of the most effective tools to influence purchase intent. A recent article in the journal Frontiers in Nutrition sheds some light on that motivation, pointing out that eating halal cultivated meat may be considered by some as a step toward Khilafa (guardianship of nature). The authors note that “adoption of a diet with a lower environmental impact, via consumption of alt protein products, may be considered a way to uphold at least two of the five key principles: the preservation of life and linage.”
The Shariah scholars who issued the new opinion included:
Sheikh Abdullah AlManea
Sheikh Abdullah AlManea is a well-respected Shariah scholar both nationally and internationally. He has been a member of the Senior Scholars Committee in the Kingdom of Saudi Arabia since 1971, as well as an appointed member of the International Islamic Fiqh Academy. He was the former President of the Makkah Al-Mukarramah Courts, and currently sits on the Shariah advisory board of many banks in the Kingdom. He is also an advisor to the Royal Saudi Court. His expertise in Islamic jurisprudence has positioned him as a sought-after authority in issuing fatwas (Islamic legal rulings).
Professor Abdullah al-Mutlaq
Professor Abdullah al-Mutlaq is a prominent Shariah scholar and a member of the Senior Scholars Committee in the Kingdom of Saudi Arabia. He was the former head of the Department of Comparative Jurisprudence at the Higher Judicial Institute and is currently an advisor to the Royal Saudi Court. He has made significant contributions to the fields of Islamic jurisprudence, education, and public service. His scholarly work has enriched Islamic libraries and has been cited in academic circles.
Professor Saad Al-Shathry
Professor Saad Al-Shathry is a distinguished Shariah scholar. He is an advisor to the Royal Saudi Court, member of the Senior Scholars Committee in the Kingdom of Saudi Arabia, as well as a current member of the Permanent Committee of Ifta’a. He is the author of over 60 books and has published more than 10 articles in scholarly journals. He is known for his advocacy of moderation and balanced interpretation of Islamic teachings, and his influence extends far beyond the Kingdom, reaching a global audience.
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Several states are digging and shipping new crops of organic potatoes, and there is potential for promotions, especially with organic russets, according to a report from the Organic Produce Network.
“We have just started to harvest field-run organic russet potatoes, and we will continue to run out of the field until the first or second week of October,” said Lonnie Gillespie, chief organic officer for Farm Fresh Direct of America in Monte Vista, Colorado. “We’re keeping our fingers crossed that by then we will be able to start shipping organic potatoes from storage. You never know what mother nature is going to do.”
Gillespie noted that while harvest is underway, potatoes can withstand normal weather patterns, but it is out-of-the-ordinary conditions that cause issues. “Extreme anything is a problem,” she said, speaking of either heat or cold. “At this time of the year, we don’t want it to be extremely cold or wet.”
But for the time being, Gillespie said the crop looks good, and Farm Fresh Direct could support some retail promotions featuring field-run organic russets. The company has a full line of organic yellows, reds, and russets available, but the yellows and reds are currently coming from the Pacific Northwest and are in lighter supply. She also noted that Farm Fresh will be offering some organic russets from Minnesota shortly.
“In the spring and early summer, we had some shortages and higher prices on all potatoes, but there is no shortage right now, and this new crop does look like it’s going to be more of an average crop,” Gillespie said.
Most of the current chatter about the new crop of conventional Idaho and Eastern Oregon potatoes currently being harvested points to a larger crop and a return to more normal FOB prices, Gilliespie said, rather than the higher prices that have been part of the landscape for the past couple of years.
Nate Jones of King’s Crown Organic Farm in King Hill, Idaho, said Idaho had excellent growing weather throughout the spring, which has led to an organic potato crop that is larger than the last two years.
“We grow four different varieties,” he said, adding that their organic acreage includes russets, yellows, reds, and purples. “The Norkotah (a russet variety) produced an awesome crop of good-sized potatoes, and the yellow crop is also very good. We are getting good yields on both of those potato varieties. The reds and purples didn’t size as well, and the yields are a little bit below average.”
While the conventional acreage of potatoes across the country is up a few percentage points, Jones does not believe that there has been an uptick in organic acreage. “Organic potatoes are not a crop that you go in and out of,” he said. “There are only a handful of us that grow organics (in Idaho), and our acreage is pretty steady.”
“We will also have more organics, but demand for organics remains fairly strong,” he said, adding that organic potatoes don’t tend to be promoted very often. “But there could be some opportunities for promotable pricing during the year.”
While there will be more organic supplies total, Beck said there might not be enough to carry throughout the entire storage season. That good demand, he said, will create some supply challenges toward the end of the season.
Beck said the organic potato consumer is a bit different than the shoppers who mostly buy conventional potatoes and will increase their purchase when the price is lower and the value is greater. The organic buyer is typically buying the category for philosophical reasons and is not driven as much by the value proposition that potatoes typically offer.
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