October 20, 2016

Deals in the savory snack sector continue on both sides of the Atlantic this week. Concurrent to the formation of a European snack giant through the £225 million merger of UK-based Kolak Snack Foods and France’s Europe Snacks, U.S.-based private equity firm Metropoulos & Co. announced an investment of $146 million in the largest independent salty snack company in the U.S. – the 95 year-old family-owned snack company, Utz Quality Foods Inc.

The investment is part of the framework of a strategic partnership between Metropoulos, the firm behind the restructuring of Hostess Brands three years ago, and Utz, the Hanover, Pennsylvania-based maker of a range of potato chips, pretzels, corn chips, tortillas, popcorn, onion rings, veggie stix, and cheese snacks.

Over the past five years Utz has made a string of strategic acquisitions, adding brands, including Good Health, Bachman, Zapp’s “Dirty,” Snikiddy, and Wachusett, to its portfolio and bringing its projected total sales for 2017 to $800 million. This growth has expanded the company to include 11 production facilities located in Pennsylvania, Colorado, Louisiana, Massachusetts, Alabama and Florida according to Food Business News.

But the company will use the capital from this investment, which is the largest initial private equity deal for a U.S. snack company since 2013, to fund its latest acquisition of Alabama-based Golden Enterprises – the southern producer of snacks under the Golden Flake brand name.

“For the past 95+ years, Utz has not only defied the odds as a successful family-owned business, we have thrived, by continuously reinvesting in our company, expanding our offerings and reach through key acquisitions, and never deviating from our core values and our commitment to our people and our high quality products,” said Dylan Lissette, president and CEO of Utz.

Hungry for a snack?

The food sector has been gaining the attention of investors in recent years. Last year, deals involving U.S. food companies reached a value of $116 billion – the highest yearly value in 20 years, according to Dealogic, reports the Wall Street Journal.  So far this year, there have been 190 U.S. food and beverage company deals announced, an increase of 8.6 percent over the same time period a year before.

Throughout these deals, Metropoulos has been a major player, investing over the past 30 years in 80 companies including Pabst Blue Ribbon, Ghirardelli, Chef Boyardee, Hungry Man, Bumble Bee, and Duncan Hines among others.

In 2013, the firm partnered with Apollo Global Management to save Hostess from liquidation in a $2.3 billion deal. Apollo and Metropoulos invested $185 million in cash and borrowed an additional $500 million to acquire the all but defunct snack business, spending $250 million to improve the company’s balance sheet and undertaking the process of streaming the company’s unwieldy production processes, upgrading facilities and relaunching products. Combined with a new marketing campaign, the measured paid off, with Hostess seeing its market share climb to 16.3 percent.

“Under the family’s strong stewardship, Utz has quietly grown into a snack powerhouse, expanding its product portfolio and geographic reach, while remaining true to its core beliefs and storied history,” said Evan Metropoulos, principal of Metropoulos & Co commenting on the firm’s latest investment.

“We look forward to working closely with Utz’s management team to develop creative product innovation, capture new consumers and generations of snackers with strategic guerrilla marketing and branding, and to broaden Utz distribution nationally, while enhancing overall operations and focusing on future strategic acquisitions,” added Daren Metropoulos, principal at Metropoulos & Co.

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Lynda Kiernan