GRAND RAPIDS — Snack food company Utz Brands Inc. has acquired a partnering Grand Rapids-based tortilla chip manufacturer and its facility as part of a $41 million deal.
Hanover, Pa.-based Utz (NYSE: UTZ) on Tuesday announced the strategic acquisition of Great Lakes Festida Holdings Inc., which owns and operates Festida Foods Ltd. in Grand Rapids.
The companies have an established relationship as Festida Foods serves as a primary supplier of tortilla chips for Utz’s On the Border brand, which is a part of the company’s extensive snack food portfolio.
“The Festida Foods team is thrilled to be joining the Utz family,” Festida Foods CEO Kyle Curtiss said in a statement. “As a premier supplier of tortilla chips to Truco Enterprises (which Utz recently acquired) and On The Border, one of the fastest growing tortilla chip brands in the United States, Utz will be in a position to leverage Festida’s manufacturing expertise, capacity and warehousing to support its brands in the Midwest.
“Additionally, and of utmost importance to our business, Utz shares a belief in a strong company culture that both supports and encourages member development. They are truly an ideal long-term partner for Festida Foods.”
For Festida, the transaction represents a multiple of 6.0 times the company’s adjusted 2020 earnings before interest, taxes, depreciation and amortization (EBITDA). Festida Foods manufactures and packs a variety of tortilla and corn chips as well as pellet snacks for branded food companies.
Utz said the deal, which is expected to close in the second quarter, will be accretive to its 2021 earnings. Utz expects to draw on its revolving credit facility to fund the $41 million cash purchase.
Festida Foods is a family-owned business with 160 employees. The company is headquartered at 219 Canton St. SW, a facility that Utz Brands will now operate.
“We expect that this strategic acquisition will enable strong supply chain synergies for our On The Border brand and enhance our ability to expand both On The Border and other Utz Power Brands geographically in the Midwest,” said Utz CEO Dylan Lissette. “Over time, we intend to expand production capabilities in the manufacturing plant to support growth in adjacent sub-categories and better serve current and future retail customers in an important area of geographic growth for the company.”
Utz operates 14 facilities in eight states, including Pennsylvania, Illinois and Indiana. Its chip brands also include Boulder Canyon and Zapp’s.
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