Hostess didn’t choose Smucker right away.
The SEC filing states that during the course of the following several days, Mr. Callahan and the Hostess board discussed the possible proposal with the corporation, which is referred to in the filing as “Party A.” Even though the board told management on May 18 that it wasn’t sure if a sale would be in the best interests of Hostess Brands’ investors, they also decided that Party A’s proposal deserved more consideration and gave Hostess management permission to hold exploratory talks about a possible deal.
Hostess continued to speak with Party A while she engaged financial advisors to review strategic options for the business over the course of the following few weeks. Party A gave Hostess a “non-binding indication of interest to acquire” on June 30. The SEC statement stated that Hostess Brands, Inc. has assumed all of its liabilities under the Tax Receivable Agreement and is valued between $32 and $34 per share.
As per the SEC filing, there were multiple conversations and information exchanges between Hostess and Party A in July. Apart from disclosing confidential details regarding potential collaborations and expansion with Party A, the confectionery manufacturer additionally granted Party A representatives access to Hostess’s under-development production plant in Arkadelphia, Arkansas. Party A representatives went to more Hostess locations later in the summer.
Party A representatives expressed interest in Hostess again on August 2, but at a price per share between $32 and $33, which was between 35.4% and 39.6% more than the closing price of $23.64 on August 1. The SEC filing states that the increased offer took into account worries about projected higher-than-expected costs of incorporating Hostess’ workers into Party A’s benefit programs and acknowledging that Hostess’ results for the second quarter fell short of projections.
On August 6, the Hostess transaction committee recommended management and financial advisors to contact other possible acquirers in order to determine their interest in a possible transaction, in light of the amended offer. The SEC filing states that during the course of the following few days, Hostess’ management and its financial advisors contacted three food firms, two of which indicated an interest in discussing a possible acquisition.
- You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
Party A made a fresh offer on August 15th, this time for $33 per share, with no reduction for monies due under the Tax Receivable Agreement. The chairman, president, and CEO of J.M. Smucker, Mark Smucker, contacted Mr. Callahan that same day to ask to speak with him. According to the SEC filing, three days later, on August 18, Mr. Smucker informed Mr. Callahan that he had heard rumors that Hostess was in talks about a possible transaction and that, if true, Smucker would be interested in speaking with Hostess. At that point, Mr. Smucker informed Mr. Callahan that Smucker had the resources to finish an acquisition without requiring additional funding and was prepared to move quickly.
The SEC filing states that Party A persisted in requesting and receiving from Hostess comprehensive legal, tax, accounting, and financial due diligence information between mid- to late-August 2023 and early-September 2023. Parties also met with Hostess management to discuss this material.
A confidentiality agreement, possibly containing the same terms as Party A, Party B, and Party C, was signed by Smucker and Hostess on August 22. A little more than a week later, on August 30, Smucker gave Hostess a confidential, non-binding offer to purchase all of the outstanding shares for $32 to $33 in cash. This amount was higher than the closing price of $22.18 on August 24, the final trading day before news of a possible acquisition broke.
Party A and Hostess continued to communicate throughout the course of the following few weeks as Smucker executives visited Hostess’ facilities and examined its finances.
Party A’s most recent offer, which was made on September 10th, was for $34 per share, according to the SEC filing.
Finally, on September 11, Hostess declared that a deal had been completed. For each share of Hostess common stock, owners will receive $30 in cash and 0.03002 shares of J.M. Smucker Co. common stock, which was valued at $4.25 per share on September 8. The buying price is almost 54% higher than the closing price of $22.18 per share that Hostess had on August 24, the penultimate trading day before Reuters revealed a possible sale.