J.M. Smucker Utilizes Corporate Bonds to Finance Hostess Brands Deal's Cash Component
J.M. Smucker Utilizes Corpor...
Subscribe to Newsletter

J.M. Smucker Utilizes Corporate Bonds to Finance Hostess Brands Deal's Cash Component

12 October 2023
4204
2 min.
8
J.M. Smucker Utilizes Corporate Bonds to Finance Hostess Brands Deal's Cash Component

J,M. Smucker's Bittersweet Deal

J.M. Smucker Co., known for its popular food brands like Folgers, Smuckers, and Meow Mix, is making strategic moves in the corporate bond market. The company aims to secure funding for its $5.6 billion acquisition of Hostess Brands Inc., the maker of iconic treats like Twinkies and HoHos. This acquisition was first announced in September.

In a regulatory filing, the company detailed its plan to issue a four-tranche bond offering, featuring fixed-rate notes with maturities of five years, ten years, twenty years, and thirty years. Notably, J.M. Smucker holds credit ratings of Baa3 from Moody's and BBB from S&P Global Ratings.

Utilization of Proceeds

The proceeds from this bond offering will be allocated as follows:

  • Financing the cash portion of the Hostess Brands acquisition.
  • Repayment of debt owed by Hostess Brands and its subsidiaries.
  • Covering fees associated with the acquisition.

Hostess Shareholder Offer

Hostess shareholders will receive $30.00 in cash and 0.03002 shares of J.M. Smucker for each Hostess share they own. This deal values Hostess shares at $34.25 each, representing a substantial 21.8% premium over the prior session's closing price at the time of the acquisition announcement.

Market Insights

Data from BondCliQ Media Services reveals strong demand for J.M. Smucker's bonds in the past ten days, with increased net buying across all maturity periods. Additionally, the company has a significant $1 billion of bonds maturing in 2025.

Bond Performance

While spreads on J.M. Smucker's existing bonds have remained relatively stable, some bonds, such as the 4.25% notes maturing in 2035, experienced a widening of about 20 basis points when the acquisition was initially announced on September 11.

Stock Performance

On the stock front, J.M. Smucker Co. saw a 1.3% decline on Wednesday, marking a year-to-date decrease of 28%. In contrast, the S&P 500 has gained 13.6% during the same period.

Section:
Rating companies
Instagram
17 Mention
Netflix
14 Mention
X (Twitter)
10 Mention
White House
8 Mention
TikTok
8 Mention
Tesla
8 Mention
Us Weekly
7 Mention

NEW YORK NEWS

News from GlobalNY.biz is the freshest and most relevant information about high-profile events in the region. The task of the resource's news feed is to convey to readers with maximum accuracy and objectivity information about important events in business, politics, economy, healthcare, culture and other spheres of life in New York.
GlobalNY.biz news is a coverage of economic processes taking place in New York, the latest news of public life, incidents and an overview of political events. New York news is information about the activities of small and medium-sized businesses, the work of housing and communal services and utilities, the implementation of significant projects.
The site's journalists describe not only the life of the region, but also talk about the current state of the US economy. Everything you need to know about innovations in the field of industry and agriculture, economy and power is collected in the "News" section at GlobalNY.biz.
New York news quickly informs the reader, shows the real picture and opens up hot topics. Communication with government structures and business enables us to provide our readers with reliable, information-rich material. The main page of the portal contains the key news of New York!
Alena Potapova

Development Director
Population
8169252433
Died this year
53029431
Born this year
130461786