ORRVILLE, Ohio — Hostess, the maker of snack classics like Twinkies and HoHos, is being sold to Orrville-based J.M. Smucker in a deal worth about $5.6 billion.
Smucker, which makes everything from coffee to peanut butter and jelly, will pay $34.25 per share in a cash and stock offer, and it will also pick up approximately $900 million in net debt.
In addition to Twinkies, Hostess makes CupCakes, DingDongs and Zingers, and also Voortman cookies.
3News' Kaitor Kay asked Orrville Mayor Dave Handwerk for his reaction to the blockbuster business deal involving Smucker. "We're very happy for Smucker," he said. "We're always glad to see them make a successful purchase like that. There's a little bit of pride that just comes from having a company like that in a small city. We're 9,000 people population-wise, but I can go on vacation in the Caribbean and eat breakfast and tell somebody that jelly, read the label, it's from Orrville, Ohio. So that's kind of a fun thing."
Handwerk says he is expecting to hear from Smucker soon on how the deal will economically impact the Orrville community.
"We haven't had that conversation with them yet," he shared. "A lot of times they'll bring somebody from the company that they purchase to work here in office buildings. In fact, a few years ago, they built an entire new office building for one of those acquisitions. Are they going to bring new employees to Orrville for this or will they simply stay where they are, but they're owned by Smucker's? Just depends on the particular kind of acquisition they made."
According to Smucker spokesman Frank Cirillo, the company's workforce in Orrville is around 1,600 people between its corporate headquarters and manufacturing facility. He added the following statement when asked how the acquisition of Hostess will impact the area:
"We are focused on evaluating the Hostess Brands organization to determine how we can most effectively support the continued momentum of the business. Given this, it is premature to address any forthcoming decisions.
"Over the next few months, we will work with the Hostess Brands team to coordinate a transition plan to ensure a seamless process for employees, customers and consumers. Once we get closer to the close of the transaction, which we anticipate will be in the third quarter of our current fiscal year, ending April 30, 2024, we will be in a better position to share organizational decisions."
Hostess Brands struggled for years and nearly vanished before it filed for Chapter 11 bankruptcy reorganization in early 2012. Workers blamed the troubles on years of mismanagement and a failure to invest in brands to keep up with changing tastes. The Lenexa, Kansas, company said at the time that it was weighed down by higher pension and medical costs than its competitors, whose employees weren't unionized.
In unwinding its business, Hostess, which was founded in 1925, sold off its brands in chunks to different buyers. Its major bread brands including Wonder were sold to Flowers Foods, which makes Tastykakes. McKee Foods, which makes Little Debbie snack cakes, snapped up Drake's Cake, which includes Devil Dogs and Yodels.
Metropoulos & Co. and Apollo bought Twinkies and other Hostess cakes for $410 million.
Apollo Global Management, founded by Leon Black, is known for buying troubled brands then selling them for a profit; its investments include fast-food chains Carl's Jr. and Hardee's. Metropoulos & Co., which has revamped then sold off brands including Chef Boyardee and Bumble Bee, also owns Pabst Brewing Co.
Hostess reemerged in 2013 with a far less costly operating structure than its predecessor company and was no longer unionized.
Case Western University Professor Jonathan Ernest provided some further perspective on what the deal could mean. He said there's likely to be changes in behind the scenes structuring and logistics.
"Maybe some of those other positions that were repetitive or redundant between the two companies in their corporate headquarters might be slimmed down or eliminated to try to get some cost savings, because essentially what they want to be able to do is continue to increase revenue and grow as companies, now as one combined company rather than two," he said.