Dive Brief:
- Utz Brands is selling its Good Health and R.W. Garcia snacks to Popchips owner Our Home as part of a $182.5 million deal.
- The transaction includes manufacturing facilities and certain related assets in Lincolnton, North Carolina, and Lititz, Pennsylvania, as well as the assumption of the lease and manufacturing operations of Utz’s Las Vegas facility.
- Utz expects the transaction to close Feb. 5. The deal will provide the food company with approximately $150 million in after-tax net proceeds, which it will use to pay down its long-term debt.
Dive Insight:
After going public following a merger with a SPAC in 2020, Utz has spent much of its time on Wall Street bulking up its operations.
It purchased tortilla chips, salsa and queso brand On The Border and Chicago-based snacking brand Vitner’s. Utz also acquired a manufacturer of tortilla chips, corn chips and pellet snacks to help grow On The Border, along with its other brands. In late 2022, it named Howard Friedman, a Post Holdings executive, as its new CEO.
But in recent months, the manufacturer of chips, cheese balls, pretzels and other snacks has been making moves to shore up its business. Last October, Utz announced it was selling or closing four facilities, including its oldest plant located in Carlisle, Pennsylvania, to cut costs and improve efficiencies across its network.
The deal with Our Home will help improve Utz’s supply chain, reduce its debt and “accelerate our brand portfolio strategy to better optimize for growth,” Friedman said in a statement. “With this important step, … we are well-positioned to execute against our expansion plans across the U.S. and deliver on our margin target.”
The divestiture of Good Health and R.W. Garcia — offerings that were not major sources of revenue for Utz — also allows the Pennsylvania company to focus on its indulgent salty snacks portfolio. R.W. Garcia is a better-for-you maker of tortilla chips, corn chips and gluten-free crackers, while Good Health produces healthier pretzels, veggie chips, popcorn, puffs and fries.
Utz estimates Good Health and R.W. Garcia-related products contributed approximately $65 million in net sales for the fiscal-year ended December 31. For the first 39 weeks of its 2023 fiscal year ended October 1, Utz recorded $1.1 billion in net sales.
Aaron Greenwald, the founder and CEO of Our Home, said the acquisitions “significantly” scale his company’s snacking platform and manufacturing footprint across the U.S. Our Home’s portfolio also includes Food Should Taste Good, Real Food From The Ground Up and You Need This brands.
“These acquisitions will diversify Our Home brands across a variety of salty snack categories, reinforcing our position as a leading independent better-for-you snacking platform,” he said. They “support our vision to deliver snacks that satisfy while creating a sense of connection and comfort at tremendous value.”
