Utz Sheds Two Brands in Strategic Move
HANOVER, Pa. — Subsidiaries of Utz Brands Inc., including Utz Quality Foods LLC, entered into a definitive agreement to sell certain assets and brands to Our Home, an operating company of brands that includes Real Food From the Ground Up, Popchips and Food Should Taste Good.
Under the agreement, affiliates of Our Home will purchase the Good Health and R.W. Garcia brands, and Utz's Lincolnton, N.C., and Lititz, Pa., manufacturing facilities and assets, along with a Las Vegas facility's lease and manufacturing operations.
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Following the close of the $182.5 million transaction, Utz and Our Home will operate under a transition services agreement for 12 months. Closing is expected this week, subject to customary conditions.
Post-closing, the parties will operate under reciprocal co-manufacturing agreements under which Our Home will co-manufacture certain Utz products and Utz will co-manufacture certain Good Health products, which will also continue to be distributed and sold on the Utz direct store delivery network for Our Home.
Our Home plans to continue to operate and grow the brands and manufacturing facilities under its platform while offering employment to Utz associates working in those facilities as part of the transition, the company said.
"We expect these transactions to deliver on our supply chain transformation and value creation initiatives, to fast-track our deleveraging timeline by a full year, and to accelerate our brand portfolio strategy to better optimize for growth," said Utz CEO Howard Friedman. "With this important step in the optimization of our supply chain and brand portfolio, together with immediate benefits to free cash flow from lower interest expense, we are well-positioned to execute against our expansion plans across the U.S. and deliver on our margin target."
The transactions are expected to provide approximately $150 million in after-tax net proceeds, which Utz will use to pay down its long-term debt. The company also expects the impact of the transactions to be accretive to its adjusted earnings per share on a full-year basis in 2024, reflecting the foregone profit related to the Good Health and R.W. Garcia brands, whose products Utz estimates contributed approximately $65 million in net sales for the fiscal-year which ended Dec. 31, 2023.
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RBC Capital Markets LLC served as exclusive financial advisor and Cozen O'Connor P.C. as legal advisor to Utz on the sale. Winston & Strawn LLP served as legal advisor to Our Home.
Located in Hanover, Utz manufactures a diverse portfolio of snack brands, including Utz, On The Border Chips & Dips, Golden Flake, Zapp's, Boulder Canyon, Hawaiian Brand and TORTIYAHS!.