Hostess Brands may be worth $25-$35 a share in takeover - analyst
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Hostess Brands (NASDAQ:TWNK) may be worth $25â$35 a share in a potential takeover after a Friday report that the Twinkies maker is exploring a sale after takeover interest. The news sent Hostess shares soaring 22% on Friday.
Hostess (TWNK) could be valued at 14â18x 2023 estimate EV/EBITA, or $25â$35 a share, assuming $895 million of net debt, Morgan Stanley analyst Pamel Kaufman wrote in a note on Sunday.
"TWNK has scarcity value given its solid topline/EPS growth outlook, which we expect to draw interest from larger packaged food companies facing slowing topline growth prospects," Kaufman, who has an equal-weight rating and $25 price target on Hostess, wrote. 
General Mills (GIS), Mondelez (MDLZ), and PepsiCo (PEP) are among the companies that have expressed interest, according to a Reuters report on Friday.
Hostess Brands (TWNK) would likely be a good strategic fit for larger snacking companies such as Mondelez (MDLZ) and Hershey (HSY), according to Kaufman. TWNK appears to be less strategic for General Mills (GIS), though it would expand the company's exposure to snacking. Pepsico (PEP) has greater "balance sheet flexibility" and could realize synergies internationally, though it has placed more focus on healthier categories.
Kaufman estimates high single-digit EPS accretion for Hershey (HSY), mid single-digit for General Mills (GIS) and Mondelez (MDLZ), and low single-digit for PepsiCo (PEP) by year three.

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