Yahoo Finance Why potato chip giant Utz just spent nearly $500 million to get into tortillas and stuffed pretzels
The dealmaking by Utz Brands (UTZ) CEO Dylan Lissette continues some three months into life as a public company.
On Thursday, the snacks giant known for its classic Utz potato chips plunked down $480 million to acquire Truco Enterprises, the maker of tortilla chips, salsa and queso under the On the Border brand. Utz estimates Truco will bring in $195 million in sales this year and $50 million in adjusted operating profits. It will be accretive to Utz’s 2021 earnings, the company said.
The tortilla purchase comes weeks after Utz spent $10 million to buy stuffed pretzel maker H.K. Anderson from Conagra Brands (CAG).
Utz has now made 12 acquisitions from 2011 to present day, taking the storied brand beyond the potato chip section. Lissette told Yahoo Finance Live he is unlikely to stop the dealmaking in an effort to expand the product portfolio and dive deeper into mass merchants such as Walmart (WMT) and Costco (COST).
“I think it’s just the beginning,” Lissette said of his acquisition appetite. “We laid out a plan to become the fastest-growing, pure play branded salty snack platform in the U.S. We were number four at the time of the IPO. This deal [Truco] makes us number three. We have also highlighted that we had some holes in our sub-category portfolio, specifically in tortillas. This deal puts us right into the fray of being a top three brand of tortillas in the U.S. So it’s really about rounding up the portfolio and making the company more productive. And it’s increasing our margins and it’s expanding our geographic reach into a lot of the U.S. in which we were under penetrated in.”
The buying binge continues to serve Utz well.
Third-quarter sales and adjusted operating profits rose 24.2% and 39.8%, respectively, from the prior year. For the year, Utz expects 10% to 11% growth in sales.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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