Please ensure Javascript is enabled for purposes of website accessibility

The Maker of Utz Snacks Is Going Public Via SPAC

By Luis Sanchez CFA – Jul 31, 2020 at 11:22AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This 100-year-old family business aims to transform itself into a national snack powerhouse.

Last month, special-purpose acquisition company (SPAC) Collier Creek Holdings (CCH) announced it will be acquiring Utz Quality Foods, effectively taking Utz public. SPACs provide an alternative means for a company to go public. Although they have been around for decades, the structure has increased in popularity, because companies that use SPACs can go public faster than via the traditional route of an initial public offering (IPO).


Utz Quality Foods owns a portfolio of snack brands, including Zapp's, Good Health, and its iconic Utz-brand potato chips. The company, founded in 1921, is one of the largest family-owned businesses in the United States. As it approached its 100-year anniversary, the family sought to monetize its business holdings and chose the SPAC route over other options.

Collier Creek's proposed acquisition of Utz values the snack food company at $1.56 billion, an 11.6-times multiple of pro forma 2021 adjusted EBITDA. The deal requires shareholders' approval, but it is expected to be completed in the third quarter of 2020.

Investors can buy shares of Collier Creek today, but those shares will be converted into shares of Utz Quality Foods once the deal is closed.

A display of Utz's various chip brands.

Image Source: Utz Quality Foods.

A growing collection of snack brands

Once public, the plan will be to continue growing the Utz portfolio through internal investments and acquisitions.

The company refers to its core snack food brands as its "power brands," which include its best-known products and constitute approximately 71% of total revenue. The power brands include craft snacks such as Zapp's potato chips, better-for-you brands such as Good Health, and licensing agreements with TGI Friday's and Herdez.

The power brands have strong appeal. However, Utz primarily distributes its products in the U.S. Northeast and Northwest. A key way the company can grow its revenue is by introducing its products to the rest of the country and becoming a national snack food brand. Utz noted that it is currently focused on expanding into the U.S. Southeast in Florida and Texas where there are large population centers. However, one challenge when expanding to these new areas is the need to invest in additional brand advertising to stoke demand.

The company could also find opportunities to grow through acquisition. As a publicly-traded company, Utz will have superior access to the capital markets and can use its stock as a currency in deals. The same team that is leading this deal with Utz will be able to help the company identify and complete other acquisitions in the future.

In 2019, Utz generated over $900 million in revenue, making it the fourth-largest snack food company in the U.S. In normal years, the company expects a growth rate of 3% to 4%. However, the COVID-19 pandemic led to a snack-buying spree that saw Utz grow sales by 23% in the 16-week period ended June 14. This rate of growth might not be sustainable, but Utz does have a plan in place that should enable it to expand in the coming years -- namely its distribution strategy and potential to bring new brands into its portfolio.

Growing from regional to national exposure

Utz's 100-year heritage in the snack food industry has generated a loyal following for its products. Becoming a publicly-traded company will allow Utz to take its business to the next level and give it access to capital it needs to become a truly national brand.

Utz has the potential to follow in the footsteps of industry giants like PepsiCo and can follow a similar growth model driven by a blend of wide distribution and selective acquisitions. As the company strives to meet this potential, it will be an interesting consumer stock to watch in the coming years.

Luis Sanchez CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Collier Creek Holdings Stock Quote
Collier Creek Holdings
PepsiCo Inc. Stock Quote
PepsiCo Inc.
$184.11 (-0.52%) $0.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.