The deal was worth about $4.6 billion excluding debt, with Jif peanut butter maker Smucker paying Hostess shareholders $34.25 per share (all figures US$). The cash-and-stock offer represents a premium of 54 per cent on the stock since the day Reuters reported the company was exploring a sale.

Hostess shares have surged 27 per cent since the report about the sale process and were up 19 per cent at $33.49 in early trading on Monday, while Smucker’s shares were down seven per cent as investors viewed the deal as too expensive.

Smucker said the deal, which is expected to close in the third quarter of its current fiscal year, represents adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about 17.2 times based on its estimate of Hostess Brands’ 2023 results.

Campbell Soup’s recent acquisition of Rao’s sauce maker Sovos Brands represented an adjusted EBITDA multiple of 14.6 times, including run rate savings, and 19.8 times excluding those. The food and tobacco sector currently trades at a 14.4 projected 12-month EBITDA on average, LSEG data shows.

“We can’t say we love this transaction from SJM’s (Smucker’s) perspective. First, the price is high; we are very surprised that SJM (or anyone) is paying this amount,” JPMorgan analysts said in a note on Monday.

Smucker’s bet on Hostess comes as major U.S. packaged food companies look to expand their brand portfolios with pandemic-era fortunes dwindling.

In recent months, the U.S. packaged food industry has seen an uptick in mergers as most of the companies seek to improve volumes by rebranding portfolios after benefits from price hikes started wavering.

Culmination of turnaround

Hostess Brands became an acquisition target after its price hikes boosted revenue but fueled investor concerns over its prospects with its volume growth consistently declining.

The tie-up between Smucker and Hostess follows a spate of other deals in the sector, including Campbell’s $2.7 billion deal for Sovos and Unilever’s purchase of premium frozen yogurt brand Yasso in North America.

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 deal with Smucker represents a major turnaround for Hostess, which has 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.

Entrepreneur Dean Metropoulos and private equity firm Apollo Global Management returned Hostess to the stock market in 2016 through a deal with a special purpose acquisition company backed by the private equity firm founded by Alec Gores.

By the end of 2020, Hostess had revamped its portfolio and was generating revenue of over $1 billion, an important landmark in its turnaround efforts. It has managed to keep its revenue growing, sometimes by raising prices as sales volumes weakened.

Smucker, which also houses coffee and pet food brands, has a market valuation of over $14 billion and had raised prices of its jams and jellies, which helped boost its profit forecast for the year.

— Reporting for Reuters by Ananya Mariam Rajesh in Bangalore and Anirban Sen and Abigail Summerville in New York; additional reporting by Dimpal Gulwani in Bangalore.

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The development, first reported by Reuters, gives CP five business days to make a new offer for Kansas City Southern. Were CP to table a new offer, a bidding war could ensue.

CP had previously announced a deal to buy KCS on March 21, before CN said it had submitted a higher bid on April 20. The headline price in CN’s cash-and-stock bid remains $325 per share as originally announced, though the company offered more of its shares to compensate for a decline in its stock price (all figures US$).

CN has offered to cover the $700 million break-up fee KCS will owe CP. It will also pay KCS $1 billion if the U.S. Surface Transportation Board (STB) rejects a voting trust structure it has put forward to complete the deal.

“We believe that Canadian Pacific’s negotiated agreement with Kansas City is the only true end-to-end Class I combination that is in the best interests of North American shippers and communities,” a CP spokeswoman said.

CP and larger rival CN are in a race to take over the U.S. railroad operator, which either way would create a North American railway spanning the U.S., Mexico and Canada, as supply chains recover from COVID-19 pandemic-led disruptions.

The acquisition interest in KCS also follows the ratification of the Canada-U.S.-Mexico Agreement last year that removed the threat of trade tensions, which had escalated under former U.S. President Donald Trump.

The STB last week approved the voting trust for CP’s proposed acquisition. CN has offered an identical arrangement.

— Reporting for Reuters by Greg Roumeliotis and Sanjana Shivdas.

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Albaugh, controlled by its 67-year-old founder Dennis Albaugh, is working with investment bank JPMorgan Chase and Co. to discuss a potential sale of the company following expressions of interest from private equity firms, the people said this week.

There is no certainty that the negotiations will lead to any deal, the sources added, asking not to be identified because the matter is confidential.

Albaugh did not respond to a request for comment, while JPMorgan declined to comment.

Headquartered in Ankeny, Iowa, the heart of the U.S. grain belt, Albaugh makes and sells generic herbicides, fungicides, insecticides and seed treatments.

It would not be the first time that Dennis Albaugh has sought to sell the company he founded in 1979. Israeli agrochemicals company MA Industries ended talks to acquire Albaugh for about US$1 billion in 2011, blaming findings during due diligence. Albaugh, however, said MA Industries demanded changes to the deal’s terms and conditions.

Last week, Platform Specialty Products Corp decided to abandon the sale of its agrochemicals business after the offers it attracted failed to meet its valuation expectations of more than US$4.5 billion. It will pursue a spinoff or initial public offering of the unit instead.

Albaugh’s assets in Canada include AgriStar Canada, which it formed in 2013 after buying AgWest, a crop input buying group formed in 1997 by independent Prairie ag retailers.

AgriStar’s product catalogue in Canada includes Crush’R glyphosate formulations; Slam’R, a clodinafop herbicide; and generic MCPA and 2,4-D herbicides.

Albaugh makes and sells certain glyphosate formulations in Canada and the U.S. through a licensing deal it signed with Monsanto in 2015.

— Reporting for Reuters by Greg Roumeliotis in New York. Includes files from AGCanada.com Network staff.

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The move comes as activist investor Elliott Management Corp. has been pushing the company for changes. BHP is working with an investment bank for the potential stake sale in its partly-built Jansen potash project, the sources said this week.

For BHP, the move will help share the risk of developing the mine and reduce its exposure to the project, said the sources, who asked not to be identified because the deliberations are confidential.

BHP laid out options for the Jansen project in an investor presentation dated Aug. 22, saying it could wait, find a partner, divest or optimize it. BHP spokeswoman Bronwyn Wilkinson said it was too early in the process for the company to have determined the size of a potential stake sale.

“If you bring in a partner, you can share the capital and risk and, depending on who the partner is, help secure an off-take (supply agreement) or offer expertise,” Wilkinson said.

BHP, which will keep control of the mine, is not tied to the 25 per cent, and the final stake sold could depend on offers, the people said. BHP’s four-million tonne mine would cost about $8.5 billion to build, with more than half of that still uncommitted (all figures US$).

The company does not need the cash either, so it is not in a hurry, the people said. The company’s underlying profit surged to $6.7 billion in the recent fiscal year.

BHP’s U.S.-listed shares jumped, rising as much as 4.5 per cent to hit a two-year high of $43.60. They were up 2.3 per cent at $42.68 in afternoon trading in New York.

The potash mine at Jansen, about 70 km southeast of Humboldt, has become the latest front in the battle between BHP, the world’s top miner, and Elliott, a hedge fund that has challenged some of the world’s biggest companies.

Elliott’s demands include getting BHP to spin off its U.S. oil and gas assets, doing away with its dual-listing structure, and improving shareholder returns. BHP earlier this week said it would exit the U.S. shale oil and gas business.

In July, BHP potash analyst Paul Burnside made a case for potash, arguing that a counter-cyclical investment would help position the company for rising demand for the commodity over the next few decades.

Elliott attacked BHP’s plans to enter the potash fertilizer market, which is facing over-supply and sluggish prices. Analysts are cautious about the sector.

Global prices of potash, a crucial crop nutrient that helps corn and other crops withstand stress, are low due to a slump in farm prices and rapid expansion of mining capacity by producers.

The company said this week it would not seek board approval in 2018 as expected for capital to finish building Jansen due to uncertainty in the potash market. Some analysts interpreted the comments as delaying the project. Production could start in the mid-2020s, BHP said.

The potash asset is expected to attract interest from global players, including Indian and Chinese firms, the people said.

Since India relies entirely on imports for potash, Indian fertilizer companies looking to sidestep price volatility could look to take advantage of attractive valuations.

Indian Potash Ltd., IFFCO, Deepak Fertilisers and Petrochemicals Corp., Rashtriya Chemicals and Fertilizers, Coromandel International are some of the top potash players in India.

Last month, Reuters reported that Indian agrochemicals producer UPL Ltd. is exploring a bid of more than $4 billion for the agrochemicals business of Platform Specialty Products Corp., in a sign that Indian agriculture firms were actively scouting for North American assets.

— Reporting for Reuters by John Tilak in Toronto and Greg Roumeliotis in New York; additional reporting by Rod Nickel in Winnipeg.

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The deal, which will likely value Popeyes at more than US$1.7 billion, is a bet by Oakville, Ont.-based Restaurant Brands that it can use its international reach to introduce Popeyes’ Louisiana-style fried chicken and buttermilk biscuits to more diners globally.

It also represents a small consolation prize for Restaurant Brands shareholder 3G Capital, which lost a US$143 billion bid this week to merge its biggest holding, food conglomerate Kraft Heinz, with consumer products firm Unilever.

A deal could be announced as early as this week, the people said, asking not to be identified because the negotiations are confidential. Restaurant Brands did not respond immediately to a request for comment, while Popeyes decline to comment.

Popeyes, whose fans include pop singer Beyonce, began 45 years ago as a Southern-fried “Chicken on the Run” restaurant in a New Orleans suburb. It has since expanded to more than 2,000 restaurants, of which 1,600 are in the U.S.

In Canada, Popeyes operates about 100 outlets, nearly all in Ontario, and began expanding last fall into the Edmonton and Calgary markets.

The company has benefited from strong customer loyalty, as well as from a restaurant refurbishment program.

Chicken accounts for about 10 per cent of the fast-food industry, according to data service IBISWorld, and Popeyes’ market share is growing. The largest brands in the sector include privately held Chick-fil-A and Yum! Brands’ KFC.

Private equity firm 3G Capital, which is controlled by Brazilian billionaire Jorge Paulo Lemann, owns about 43 per cent of the voting shares in Restaurant Brands. 3G Capital has made a name by acquiring major U.S. consumer companies including Kraft Heinz.

Restaurant Brands was formed in 2014, when 3G Capital-backed Burger King acquired Canadian coffee and doughnut chain Tim Hortons Inc for US$11 billion.

3G Capital’s long-time partner, Warren Buffett’s Berkshire Hathaway, committed US$3 billion of preferred equity to finance that deal.

— Reporting for Reuters by Lauren Hirsch and Greg Roumeliotis.

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The $128 a share deal announced on Wednesday, up from Bayer’s previous offer of $127.50 a share, is the biggest of the year so far and the largest cash bid on record (all figures US$).

The transaction will create a company commanding more than a quarter of the combined world market for seeds and pesticides in a fast-consolidating farm supplies industry.

However, competition authorities are likely to scrutinise the tie-up closely, and some of Bayer’s own shareholders have been critical of a takeover plan which they say is too expensive and risks neglecting the company’s pharmaceutical business.

“Bayer’s competitors are merging, so not doing this deal would mean having a competitive disadvantage,” said Markus Manns, a fund manager at Union Investment, one of Bayer’s top 12 investors, according to ThomsonReuters data.

He said few people had expected a deal to be agreed at less than $130 a share, but that there were regulatory risks and the acquisition would also leave Bayer with less scope to invest in healthcare, where rivals are consolidating too.

The transaction includes a break fee of $2 billion that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.

The details confirm what a source close to the matter told Reuters earlier.

At 2:30 p.m. GT, Bayer shares were up 2.4 per cent at 95.52 euros (C$141.07). Monsanto’s were up 0.7 per cent at $106.80 (C$140.60).

Baader Helevea Equity Research analyst Jacob Thrane, who has a “sell” rating on Bayer shares, said the German company was paying 16.1 times Monsanto’s forecast core earnings for 2017, more than the 15.5 times ChemChina agreed to pay for Swiss crop chemicals firm Syngenta.

He also said there was uncertainty over what the combined company would look like as regulators might demand asset sales.

Some analysts said the deal could face a rough ride from U.S. politicians opposed to a key supplier of U.S. agriculture falling into foreign hands and from farmers concerned a reduction in competition could lead to higher prices.

Bayer said it needed approval from antitrust authorities in 30 jurisdictions, but its initial feedback from both regulators and politicians was encouraging.

The German firm said it expected the deal to boost core earnings per share in the first full year following completion, and by a double-digit percentage in the third year. It is targeting $1.2 billion in annual cost synergies and $300 million in sales synergies after three years.

One-stop shop

Bayer’s move to combine its crop chemicals business, the world’s second largest after Syngenta, with Monsanto’s industry leading seeds business, is the latest in a series of major tie-ups in the agrochemicals sector.

The German company is aiming to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers.

That was also the idea behind Monsanto’s swoop on Syngenta last year, which the Swiss company fended off, only to agree later to a takeover by China’s state-owned ChemChina.

Elsewhere, U.S. chemicals giants Dow Chemical and DuPont plan to merge and later spin off their respective seeds and crop chemicals operations into a major agribusiness.

“The combined business will be ideally suited to cater to the requirements of farmers… because we have equal and meaningful strength in both crop protection, seeds and traits, and digital and analytical tools,” Bayer CEO Werner Baumann said on a call with analysts.

The deal will be the largest ever involving a German buyer, beating Daimler’s tie-up with Chrysler in 1998, which valued the U.S. carmaker at more than $40 billion. It will also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.

Bayer said it was offering a 44 per cent premium to Monsanto’s share price on May 9, the day before it made its first written proposal.

It plans to raise $19 billion to help fund the deal by issuing convertible bonds and new shares to its existing shareholders.

It also said BofA Merrill Lynch, Credit Suisse , Goldman Sachs, HSBC and JP Morgan had committed to providing $57 billion of bridge financing and that it was targeting an investment grade credit rating after completion of the deal.

Bayer and Monsanto were in talks about a possible tie-up as early as March, which culminated in Bayer’s initial $122 per-share proposal in May.

Antitrust experts have said regulators will likely demand the sale of some soybeans, cotton and canola seed assets as a condition for approving the deal.

The two companies said their merged agriculture business would have its global seeds and traits and North American commercial headquarters in Monsanto’s U.S. home base of St. Louis. The merged global crop protection and overall crop science headquarters would be in Monheim, Germany, while the combined company’s “digital farming” activities would be based in San Francisco.

The two companies said they would also keep “an important presence” in Durham, North Carolina — the current home base for Bayer CropScience in the U.S. — and in “many other locations throughout the U.S. and around the world.”

Bayer CropScience’s Canadian operations are based in Calgary, with seed breeding operations in Saskatoon, seed processing at Lethbridge and formulation and distribution facilities in Regina.

Monsanto’s Canadian business, meanwhile, is based in Winnipeg, with production facilities at Lethbridge and Cranbrook, B.C., research farms at Edmonton, Saskatoon and Yorkton, Sask., research facilities at Guelph, London, Ont. and Oakville, Man., a seed breeding operation at Carman, Man. and a corn and soy distribution centre at Tillsonburg, Ont.

Both Monsanto and Bayer CropScience also maintain Canadian regulatory offices in Ottawa and operation centres for Eastern Canada at Guelph.

— Reporting for Reuters by Greg Roumeliotis in New York and Ludwig Burger in Frankfurt; additional reporting by Arno Schuetze and Christoph Steitz. Includes files from AGCanada.com Network staff.

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Bayer’s announcement came as the gap in price expectations between the two companies has narrowed significantly, although important terms, including potential divestitures in case of antitrust scrutiny, have yet to be agreed on.

Bayer in a statement said that it was prepared to offer $127.50 per share in connection with a negotiated deal, up from its previous offer of $125 per share (all figures US$). The Bayer statement confirmed a report by German daily Rheinische Post earlier on Monday.

Rheinische Post also reported, citing sources which it did not identify, that an offer of $130 per share may be necessary to clinch a deal with Monsanto “in a swift and friendly way.”

In a brief statement, Monsanto said on Monday it had been engaged in “constructive” negotiations with Bayer, during which it received the updated non-binding acquisition proposal for $127.50 per share in cash.

The St. Louis-based company added that it was continuing these conversations as it evaluated Bayer’s offer, as well as proposals from other parties it did not name. It cautioned that there was no certainty that any deal would occur.

Bayer’s bid was already the largest all-cash proposed takeover on record. A deal with Monsanto would give the German company a shot at grabbing the top spot in the fast-consolidating farm supplies industry.

ChemChina agreed earlier this year to buy Switzerland’s Syngenta for $43 billion, after the latter rejected takeover approaches from Monsanto. Dow Chemical and DuPont are forging a $130 billion merger, which is to be followed by a break-up into three businesses.

In July, Bayer raised its earlier offer of $122 per share to $125 to put Monsanto under pressure to engage further.

Monsanto subsequently turned down Bayer’s $125 a share offer, but said it was open to further talks with the German company, as well as other parties.

Reuters reported last month that Monsanto’s talks with Bayer were making progress, with the latter receiving some limited access to Bayer’s books.

Since then, negotiations have advanced further, with more information exchanged between the two sides and the chief executives of the two companies engaging in direct discussions, according to people familiar with the matter, who asked not to be identified because of the confidentiality of the talks.

However, while the two companies are close to reaching an agreement on price, they have yet to agree on a strategy on how to jointly tackle potential antitrust challenges, the people said.

— Reporting for Reuters by Ludwig Burger in Frankfurt and Greg Roumeliotis in New York; additional reporting by Gayathree Ganesan in Bangalore.

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The widely expected rejection puts pressure on Bayer to sweeten its offer once again, at least enough to get access to Monsanto’s books. The two companies have been in negotiations about a potential confidentiality agreement, Reuters reported on Monday.

Monsanto said on Tuesday its board unanimously viewed Bayer’s latest bid as “financially inadequate and insufficient to ensure deal certainty.”

“Monsanto remains open to continued and constructive conversations with Bayer and other parties to assess whether a transaction that the board believes is in the best interest of Monsanto share owners can be realized,” the company said.

Bayer said it was disappointed with Monsanto’s decision to reject its latest offer but was looking forward to continued dialogue with Monsanto under an appropriate confidentiality agreement that would allow access to additional information.

Access to confidential information has been a major sticking point in Bayer’s negotiations with Monsanto ever since the German company offered to acquire Monsanto in May.

Bayer disclosed Thursday that it had increased its bid by $3 per share. Its latest $125-per-share offer is the largest all-cash bid on record. Bayer also offered a $1.5 billion reverse antitrust breakup fee, equivalent to about 2.3 per cent of the deal’s value.

By comparison, the breakup fee ChemChina offered to acquire Swiss peer Syngenta should the deal not go through is $3 billion, representing 7 per cent of the $43 billion transaction value.

Monsanto would like Bayer to sweeten its offer further, including increasing the breakup fee, before providing Bayer access to financial information, according to people familiar with the matter who asked not to be identified discussing private discussions.

Monsanto’s shares were up 0.35 per cent to $106.81, while Bayer shares were down 1.2 per cent at 91.87 euros.

Bayer argued last week that it had comprehensively addressed Monsanto’s questions about financing and regulatory matters and said it was prepared to make certain commitments to regulators, if required, to complete a deal.

Investor concerns Bayer may overpay

Henderson Global Investors, an investor in Bayer, has called for a vote on the proposed takeover of Monsanto, which it said threatened the long-term strength of the German company. Some other Bayer investors have also expressed concerns the company may overpay to secure a deal.

Monsanto Chief Executive Hugh Grant said last month that his company was in talks with Bayer and other companies in its sector about “alternative strategic options.” He did not name the other companies, but Reuters has previously reported that Monsanto had discussed a business combination with BASF SE .

The seeds and agrochemicals industry has been jolted by several large deals in the past year as low crop prices and belt-tightening by farmers pressured earnings.

Syngenta AG, which Monsanto tried to buy last year, agreed in February to be acquired by ChemChina for $43 billion. Dow Chemical Co and DuPont struck a $130 billion mega-merger late last year.

Monsanto said last month net income tumbled more than 37 per cent to $717 million in the quarter ended on May 31. It cited a global glut of generic glyphosate, the active ingredient in its Roundup herbicide, and delays in securing European Union import approval for its next-generation biotech soybeans.

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The move shows the two companies have made little progress in their negotiations since Monsanto rejected Bayer’s previous offer in May while saying it was open to “continued and constructive conversations.”

Monsanto CEO Hugh Grant said last month that the company was in talks with Bayer and other companies in its sector about “alternative strategic options.” He did not name the other companies, but Reuters has previously reported that Monsanto had discussed a business combination with BASF.

Bayer said on Thursday that it had raised its offer to $125 a share from $122 in cash and offered Monsanto a $1.5 billion reverse antitrust breakup fee (all figures US$), “reaffirming its confidence in a successful closing.”

Bayer also said it had comprehensively addressed Monsanto’s questions about financing and regulatory matters, and that it was prepared to make certain commitments to regulators, if required, to complete a deal.

Monsanto said its board would review Bayer’s latest proposal, in consultation with its financial and legal advisors.

Shares of Monsanto were up 2.9 per cent at US$104.03 in afternoon trading in New York, while Bayer closed up 0.5 per cent at 93.44 euros (US$103.88) in Frankfurt.

Monsanto may respond to Bayer’s latest offer as early as this week, according to people familiar with the matter. They asked not to be identified discussing confidential deliberations.

While Monsanto has shared more information with Bayer since May, it has yet to provide it with a confidentiality agreement that would allow the German company to go over its books, the sources said.

Bayer’s relatively modest price increase in its offer also reflects the view that Monsanto’s recent poor earnings have weighed on its valuation.

Monsanto said last month that its net income tumbled more than 37 per cent to $717 million in the quarter ended on May 31.

The company cited a global glut of generic glyphosate, the active ingredient in its Roundup herbicide, and delays in securing European Union import approval for its next-generation biotech soybeans.

— Greg Roumeliotis is a Reuters editor covering mergers and acquisitions from New York City. Additional reporting for Reuters by Harro ten Wolde in Frankfurt.

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The impasse shows that little progress in negotiations has been made since Monsanto on May 24 turned down its German peer’s $122-per-share cash offer but said it was open to “continued and constructive conversations” (all figures US$).

Monsanto has said that Bayer’s offer “significantly undervalues (the) company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition.”

Bayer, however, has no plans to increase its offer without first reviewing Monsanto’s confidential information, the sources said on condition of anonymity because of the confidentiality of the talks.

The Leverkusen-based company needs access to Monsanto’s books before it can decide whether it can pay a higher price, as well as offer a more detailed plan on how to address potential antitrust risks, the sources added.

Bayer also has no intention currently to go hostile with its bid, the sources said.

Monsanto, based in St. Louis, has not directly told Bayer that it is looking for better terms in order for it to offer the German company access to confidential information, according to one of the sources.

However, Monsanto’s lack of engagement demonstrates that it not only views Bayer’s offer as too low, but that it does not even consider it as a basis for negotiations, the sources said.

The situation did not change even after Monsanto held a regular board meeting this week to approve a quarterly dividend of 54 cents per share.

Bayer declined to comment, while a Monsanto spokeswoman did not respond to a request for comment.

The Wall Street Journal had reported earlier on Friday that Bayer had made a new takeover approach to Monsanto that was rebuffed, in part because it didn’t include a higher price.

Bayer’s unsolicited bid for Monsanto is the largest all-cash takeover on record, according to Thomson Reuters data, just ahead of InBev SA’s $60.4 billion offer for Anheuser-Busch in June 2008.

Global agrochemicals companies are racing to consolidate, partly in response to a drop in commodity prices that has hit farm incomes. Seeds and pesticides markets are also increasingly converging.

ChemChina plans to buy Switzerland’s Syngenta for $43 billion, after Syngenta rejected a bid from Monsanto. Dow Chemical and DuPont are forging a $130 billion business.

— Reporting for Reuters by Greg Roumeliotis in New York; additional reporting by Arno Schuetz and PJ Huffstutter in Chicago.

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