Acquisition vertically integrates largest supplier of the company's ON THE BORDER tortilla chip brand
Utz Brands, Inc. has announced that its subsidiaries have entered into a definitive agreement with Great Lakes Festida Holdings, Inc. and related entities, to acquire all of the assets, including the real estate located in Grand Rapids, MI, related to the operation of Festida Foods (“Festida Foods” or “Festida”). Festida Foods is a manufacturer of tortilla chips, corn chips, and pellet snacks, and the largest manufacturer of tortilla chips for Utz’s ON THE BORDER (“OTB”) tortilla chip brand. The total purchase price is $41 million and is subject to customary purchase price adjustments.
The transaction represents an acquisition multiple of approximately 6.0x fiscal 2020 Festida Adjusted EBITDA of $6 million excluding estimated synergies, and 5.1x fiscal 2020 Festida Adjusted EBITDA including expected run-rate cost synergies of at least $1 million (in each case including approximately $5 million in net present value from expected tax benefits resulting from the transaction). Utz expects the transaction to be accretive to earnings in 2021 and beyond. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2021.