Report: Hostess Weighs Sale After Takeover Interest From Food Giants

Some of the world’s biggest food companies are reportedly interested in buying Hostess Brands.

The Twinkies-maker is considering a sale after hearing takeover interest from companies that include General Mills, PepsiCo, Mondelez International and The Hershey Company, Reuters reported Friday (Aug. 25) — citing sources familiar with the matter.

PYMNTS has contacted all five companies for comment but has not yet received a reply. The report said Hostess has hired Morgan Stanley for guidance on the deal negotiations, though an agreement is not guaranteed, per the sources.

As the Reuters report noted, Hostess became an acquisition target following a price hike on some of its snack foods, leading investors to worry about its future.

PYMNTS’ research has found that while consumers have been purchasing more snacks of late, they’ve also been seeking cheaper ways to get their junk food fix while still sticking with their favorite brands.

Data from the Consumer Inflation Sentiment series, “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” for which we surveyed more than 2,000 U.S. consumers about their experiences and perceptions in shopping, shows that many shoppers are on the hunt for less expensive snack options.

The research found that about a third of shoppers say they are buying snacks from merchants with lower prices, more than any other food or beverage grocery category.

“Yet even as consumers report that they are seeking cheaper options, national brands maintain that their customers continue to be loyal, suggesting that, if these reports are accurate, shoppers are trading down on merchants but not as much on products,” PYMNTS wrote in May.

“We continue to invest in our core categories of chocolate, biscuits and baked snacks. … All this continues to strengthen our already strong brand loyalty,” Mondelēz International CEO Dirk Van de Put told analysts on an earnings call.

Luca Zaramella, the company’s finance chief, added that instead of consuming fewer snacks, shoppers were instead looking for deals on the products that they would have purchased anyway, and reconsidering pack sizes based on their budgets.

Other snack food brands, like chip and pretzel maker Utz, are seeing competition from lower-priced private-label options.

“I think it’s very normal in this environment that we start to see private label come back into the conversation. They play an important role for retailers,” Utz CEO Howard Friedman said during an earnings call earlier this month, adding that, while these brands make up just 5% of potato chip sales, they remain a source of competition.