JM Smucker is reportedly gauging the interest in Voortman Bakery, an asset the US manufacturer snapped up last year.
According to Reuters, JM Smucker is working with Goldman Sachs to see what interest there could be in a business unit it acquired when it bought Hostess Brands for $5.6bn ten months ago.
Just Food has approached JM Smucker for comment.
Voortman Bakery is part of a sweet baked snacks arm JM Smucker formed when it acquired Hostess Brands, a deal that also included brands such as Donettes and Twinkies.
Hostess Brands acquired Canada-based wafer and cookie business Voortman Bakery from private-equity firm Swander Pace Capital and management for around $320m in 2019.
In June, JM Smucker said its sweet baked snacks unit generated net sales of $637.2m in the year to the end of April. Group net sales were $8.18bn.
The division posted a “segment profit” of $138.2m. Company-wide segment profit was $1.94bn.
In a note to clients reflecting on the Reuters report, TD Cowen analyst Robert Moskow said: “Voortman product sales ($190m at retail) are stable over the past 52 weeks while the remaining Hostess sales are down 2% including mid-single-digit declines in the past 12 weeks. This could imply slight dilution to the growth algorithm for Hostess assets in fiscal year 2025 if they sold the business. Voortman was margin accretive to the Hostess business as well.”
He added: “Most investors believe that Smucker overpaid for Hostess and will fail to achieve the lofty 4% long-term organic growth target they assumed in their acquisition model. As a reminder, the guidance for fiscal year 2025 assumes that Hostess returns to 3-5% growth in H2. Success, in our view, will depend on introducing more resonant product innovation and finding the right balance between trade promotion and margins to drive volume.”
