Utz acquires long time co-manufacturer of tortilla chips for On the Border brand
The transaction includes all of Festida’s assets, including the real estate located in Michigan, and represents a multiple of 6x Festida’s adjusted 2020 EBITDA of $6m (excluding estimated synergy).
Utz will be drawing on its revolving credit facility to fund the $41m cash purchase and anticipates it to be accretive to its 2021 earnings, generating net present value of $5m from tax benefits and $1m in cost synergies.
Festida – which was founded in 1991 – develops and co-packs tortilla chips, corn chips and pellet snacks for various branded food companies across the US. The family-owned producer supplies the tortilla chips for the On The Border brand, which Utz recently inherited with the acquisition of Truco Enterprises.
“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.”
Festida’s CEO Kyle Curtiss added, “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.”
The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2021.