SEC Filing Chronicles How the Hostess Acquisition Unfolded

Oct. 18, 2023
Acquirer J.M. Smucker was not the first suitor; there were six other interested parties, but no names in a Securities and Exchange Commission filing.

To no one’s surprise, J.M. Smucker Co. was not the only suitor interested in acquiring Hostess Brands. According to a Hostess filing Oct. 10 with the Securities and Exchange Commission, there were six other interested parties, although in the document they are only referred to as Parties A through F.

The 71-page SEC filing provides an interesting but painfully detailed chronology of the events leading up to the purchase of the iconic snack cakes company by the transforming peanut butter and jelly company.

Earlier media reports, including ours, said Hostess was being courted by General Mills, Mondelez International, PepsiCo and Hershey. None of those companies has been confirmed as a suitor. Smucker was never mentioned before the deal was announced on Sept. 11.

The end of Hostess as an independent company began with an out-of-the-blue May 16 phone call from “the chief executive officer of a publicly traded U.S. packaged food company, which we refer to in this discussion as Party A,” the SEC document explains. The unnamed CEO said his company would be interested in acquiring Hostess in an all-cash transaction in the range of $31-33 per share, a premium of approximately 18.5-26.1% over Hostess’ recent closing price.

Hostess’ board formed a committee and empowered CEO Andrew Callahan to discuss a deal with Party A. Morgan Stanley was hired as financial advisor. Discussions with Party A continued even as the Hostess annual stockholders meeting convened June 6.

For nearly three months, the only discussions were with Party A. But on Aug. 7, Morgan Stanley made three other food companies aware that Hostess might be for sale. “We refer to these companies as Parties B, C and D,” the filing states.

Parties B and C expressed immediate interest, and they entered into confidentiality agreements. Hostess officials eventually met with them in Chicago, and Party B continued to discuss proposals throughout the process, while Party C appeared to drop out. Party D showed no interest.

Smucker’s name first appears on Aug. 15.

Out of the blue on Aug. 22, another public packaged food company, referred to as Party E, contacted Morgan Stanley, noted that they heard rumors that Hostess Brands was in play and expressed their interest, although theirs would have been a stock-for-stock transaction.

On Aug. 25, a representative of Reuters news service contacted Morgan Stanley and Hostess separately to advise them that Reuters intended to publish an article stating that Hostess Brands was in discussions with potential acquirers. The article, which mentioned General Mills, Mondelez, PepsiCo and Hershey, was published that same day.

Three days after the publication of that story, Morgan Stanley received an inquiry “from a well-capitalized, packaged food company that we refer to as Party F.” Meanwhile, Party A aggressively continued to negotiate, and a merger agreement with that company was drafted by Morgan Stanley, with a final offer of $33 per share in cash.

But you know how this story ends. Smucker upped its proposal to an equivalent of $34.25 per Hostess share, consisting of $30 in cash and the equivalent of $4.25 in Smucker common stock, for a total of $5.6 billion. On the morning of Sept. 10, Mark Smucker, chairman and CEO of J.M. Smucker, called Callahan to “express his appreciation” but warning that this was Smucker’s best and final offer. The two companies announced the signed agreement by press release before the market opened the next morning.

About the Author

Dave Fusaro | Editor in Chief

Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.

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