Although considered a "lesser strategic fit" for General Mills, Hostess does offer potential benefits to the Minneapolis-based company, Morgan Stanley said, including the potential to expand General Mills' exposure to snacking, accelerate top-line growth and expand internationally. "General Mills has a stated portfolio reshaping strategy and turned over ~20% of its business since FY18 through M&A in categories such as pet and divestitures of slower growing businesses (European yogurt)," the report said. "(Hostess) would be accretive to General Mills' top-line growth and would also offer General Mills a strong distribution network in the c-store channel." Morgan Stanley did not divulge what kind of fit PepsiCo would be, only acknowledging that the Purchase, NY-based company "has greater balance sheet flexibility and could realize revenue synergies from expanding (Hostess) internationally, although it has placed a greater strategic emphasis on better-for-you categories."