US-based Utz Brands has sold two brands and a pair of factories to Our Home, the company behind Popchips snacks.
Our Home will pay Utz $182.5m for the Good Health and RW Garcia brands, plus factories in North Carolina and Pennsylvania.
The deal sees Our Home, which also markets Food Should Taste Good snacks, take on the lease for a manufacturing facility in Las Vegas.
In September, Utz set out plans to overhaul its manufacturing network to “support long-term volume growth and reduce costs”.
The Boulder Canyon maker sold a plant in Indiana and put two others – one in Louisiana and one in Alabama – on the block.
After closing their deal, there will be a co-manufacturing agreement between Utz and Our Home under which they will make certain of each other’s products.
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The Zapp’s owner said the proceeds from the sale will be used to “reduce long-term debt”.
Howard Friedman, the CEO of Utz, said: “We expect these transactions to deliver on our supply chain transformation and value creation initiatives, to fast-track our deleveraging timeline by a full year, and to accelerate our brand portfolio strategy to better optimise for growth.”
Utz has a target of approximately three times net leverage by the end of fiscal 2025.
At a recent investor day, Utz said it would look to make $45m in savings from its supply chain overhaul between the 2024 and 2026 fiscal years. It expects the deal with Our Home to “accelerate” that process.
Friedman added: “With this important step in the optimisation of our supply chain and brand portfolio, together with immediate benefits to free cash flow from lower interest expense, we are well-positioned to execute against our expansion plans across the US and deliver on our margin target.”
Aaron Greenwald, the founder and CEO of Our Home, said: “This acquisition from Utz … significantly scales Our Home’s snacking platform and manufacturing footprint across the United States.”
Our Home will have five manufacturing facilities across the US.
Utz, meanwhile, issued preliminary financial data for 2023 ahead of the publication of its annual results next month.
The company estimates its net sales will grow by 2-2.2% and is narrowing its adjusted EBITDA forecast to growth of 9.5-10% versus the prior expectation of growth of 8-11%.