(Utz Snacks via Facebook)
key takeaways:
- Utz Brands agreed to a $2.9 billion deal with Germany’s Intersnack Group, which will acquire all Class A shares and co-own the company.
- The acquisition gives Intersnack its first presence in the US market, while giving Utz a partner as European snack makers expand into the US.
- The transaction is expected to close in the fourth quarter and will be financed through cash, debt and family rollover equity.
Utz Brands Inc. agreed to go private with InterSnack Group GmbH in a $2.9 billion deal, giving the European snacking powerhouse its first foothold in the U.S. market.
InterSnack will acquire all of Utz’s Class A shares for $14.25 per share, a premium of approximately 91% to the July 20 closing price. Entities controlled by the Rice and Lysette families will retain half of Utz, while the other half will be held by Intersnack.
The deal is the latest example of European snack makers looking to the US for growth in packaged foods. Last year, Italy’s Ferrero Group, the family-run maker of Nutella, bought cereal maker WK Kellogg Co., expanding its reach to include iconic cereal brands like Frosted Flakes and Froot Loops. Earlier this year, French dairy company Bell Group announced the acquisition of Ingenuity Foods.
Utz, based in Hanover, PA, is known for its pretzels as well as Zap’s branded snacks and On the Border chips and salsa. The century-old company went public in 2020 through a special purpose acquisition company. Its revenue was recorded at $1.44 billion last year, and analysts expect 4% growth this year.
“Since Utz went public via SPAC, we have consistently seen management and the board open to strategic alternatives and focused on maximizing shareholder value through whatever avenues offer the most attractive returns,” Barclays analyst Andrew Lazar wrote in a research note. “The more surprising aspect is not that a deal ultimately happened, but that it happened only after several years of valuation compression.”
On July 21, Utz’s shares rose 90% to trade near the offer price. The stock had declined over the past few years amid concerns about pricing and declining demand in the salty snack category. A year ago shares were trading above $14.
Intersnack, based in Düsseldorf, Germany, has a history of buying and growing local brands. The company transformed itself into a major snacking giant in Europe and Australia through acquisitions, including French chip brand Vico in the late 1990s and well-known UK brands such as McCoy’s in 2012. It has also added healthier snack brands, including the German Altje nut brand. The company says its sales last year were 4.5 billion euros ($5.1 billion).
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Utz will be Intersnack’s first foray into what Executive Chairman Johan van Winkel referred to as “the large and attractive US snacking market.” InterSnack has long admired Utz’s history and its brands, the company said in a statement.
The deal, which is expected to close in the fourth quarter, will be financed by $920 million of cash from Intersnack, as well as borrowings under a $1.1 billion term loan facility and a $250 million asset-based loan facility. The Rice and Lysette families are also using rollover equity and the proceeds from a $44 million tax-related settlement.
Utz Quality Foods/Golden Flake Snack Foods ranked 32nd on the Transportation Topic list of top foodservice carriers.
