Jif peanut butter maker J.M. Smucker is nearing a deal to buy Hostess Brands, the owner of Twinkies snack cakes, for close to $5 billion, sources familiar with the matter recently said.
The deal value excludes Hostess' net debt of about $900 million, the sources told Reuters, requesting anonymity because the matter is confidential.
Hostess has a market capitalisation of about $3.73 billion, according to LSEG data, after a nearly 27% jump in its stock since 25 August, when Reuters reported the company was exploring a sale after fielding takeover interest from major food makers.
Hostess and J.M. Smucker did not immediately respond to Reuters' request for comment outside regular business hours.
The Wall Street Journal first reported on a potential deal.
US packaged food companies have seen an uptick in mergers amid fading pandemic-era fortunes and as benefits of price hikes start to taper off.
Among recent deals, Campbell Soup struck a $2.7 billion deal for Rao's sauce maker Sovos Brands, Unilever bought premium frozen yogurt brand Yasso in North America, while Snickers maker Mars acquired healthy foods maker Kevin's Natural Foods.
Hostess became an acquisition target after it raised prices on some of its products to boost revenue, fuelling investor concerns over its prospects.
Based in Lenexa, Kansas, Hostess was founded in 1930 and is behind several iconic household brands, including Ho-Hos, Ding Dongs, Zingers, and Voortman cookies and wafers.
The company filed for bankruptcy twice, in 2004 and 2012, due to a combination of private equity owners saddling it with debt and failing to come up with new snacks that appealed to consumers.
J.M. Smucker, which also houses coffee and pet food brands, has a market value of over $14 billion.
Following an industry-wide trend, the Orrville Ohio-based company had also raised prices of its products like jams, jellies and pet food, helping boost its profit forecast for the year.