- Utz Brands is buying Truco Enterprises, a manufacturer of tortilla chips, salsa and queso under the On The Border brand from Insignia Capital Group for $480 million, the companies announced in a statement. The transaction is expected to close in December.
- Utz said the purchase gives it a bigger presence in the tortilla chip segment with $6.2 billion in retail sales, the second biggest category in salty snacks behind potato chips, as well as a meaningful presence in salsa, queso and dips. The transaction also strengthens Utz's national footprint, with the majority of On The Border’s sales in emerging geographies, while giving it a bigger presence in mass and club retail channels.
- The purchase for Utz, which went public in August after it was acquired by blank check company Collier Creek Holdings, comes just over a month after the snack maker announced the purchase of the H.K. Anderson peanut butter-filled pretzel brand from Conagra Brands for less than $10 million.
For a company that has built a meaningful presence in the snacking category with its own chips, pretzels and other offerings, Utz has hit the accelerator when it comes to bulking up its portfolio.
Last year, Utz purchased Snyder of Berlin from Conagra, and closed a merger with Kitchen Cooked, a maker of snack food brands like potato chips, Kettle Kurls, Kettle Pops, popcorn and pretzels. In September, it bought H.K. Anderson peanut butter-filled pretzel brand from Conagra after its deal with Collier Creek.
Utz, which went public in August, used the deal to pay down debt. The transaction improved the balance sheet of the nearly 100-year-old company and left it with plenty of dry powder to grow its presence in the fast-growing snack space.
“As we looked at the landscape and understood that we really wanted to not just be a company that dotted along. We wanted to be a growth company, a national company. We want to compete against the largest CPG competitors in the salted snack industry,” CEO Dylan Lissette, the son-in-law of the founders’ grandson, told CNBC in August.
As consumers spend more time at home because of the pandemic, the already popular snacking category has been among the biggest beneficiaries. According to statistics from Nielsen, sales of salty snacks, where Utz and On The Border have a major presence, were up almost 25% above last year during the last week in April. And Mondelez International reported this week that 88% of adults said they are snacking more or the same than they were before the outbreak. The report showed the salty snacks category, which includes chips, popcorn and pretzels, has been especially strong, with sales jumping 7% between 2019 and 2020.
The $480 million purchase of Truco Enterprises is a sizable investment for Utz, which itself has a market valuation of just over $1 billion. But price tag aside, the deal complements its other brands and gives Utz a deeper presence in the $28 billion salty snacks category by increasing its scale in a different area beyond chips and pretzels.
In a statement announcing the deal, Lissette said the purchase will make Utz "a significant competitor" in tortilla chips where On The Border holds the No. 3 spot while providing it with "a meaningful position" in salsa, queso and dips. The addition of these brands also will complement Utz's own premium Tortiyahs chip brand and improve the company's scale and product diversification.
Utz's larger portfolio of snacks also will make it more competitive with multi-billion dollar heavyweights in the CPG space, such as Conagra Brands, Campbell Soup and Hershey who are aggressively making snacking deals of their own. With the On The Border acquisition, Utz has a deeper snacking portfolio it can use to negotiate with retailers since it has more products with a wider distribution to offer. As Utz seeks to carve out a bigger presence in snacking, it has all but telegraphed that more deals are on the way.