Utz Quality Foods has agreed to combine with Collier Creek Holdings to form Utz Brands Inc. and will become publicly listed after nearly 100 years as a family-owned business. The company will be a pure-play snack food platform in the U.S.
Upon the closing of the transaction, it is expected that Utz Brands will trade under the ticker symbol “UTZ” on the New York Stock Exchange.
Founded in 1921, Utz has grown to become the largest family-owned salty snack company in the U.S., with more than 40 years of consecutive Adjusted Net Sales growth. The company’s iconic portfolio of brands includes Utz, Zapp’s, Golden Flake, Good Health and Boulder Canyon, among others.
The company operates 14 manufacturing facilities nationwide with a broad range of capabilities, producing a full line of potato chips, pretzels, cheese snacks, veggie snacks, pork skins, pub/party mix and other snacks, including innovative better-for-you snacking options. Utz Brands is expected to have an initial enterprise value of approximately $1.56 billion or 11.6x its estimated 2021 Pro Forma Adjusted EBITDA of $134 million.
Collier Creek was co-founded by Chinh Chu, Roger Deromedi and Jason Giordano, who bring more than 80 years of combined investing and operating experience, with a focus on the consumer goods sector. Deromedi, who had a long tenure as chairman of Pinnacle Foods and, prior to that, as CEO of Kraft Foods, will become chairman of Utz Brands. The board of directors will be composed of a majority of independent directors under the applicable listing rules of the New York Stock Exchange.
Dylan Lissette, who has served as Utz’s CEO since 2013 and has worked at the company for almost 25 years, will continue to lead the business along with the existing management team. Utz Brands will remain headquartered in Hanover, Pennsylvania.
Proceeds from the transaction are expected to be used primarily to repay existing borrowings at Utz. The Rice and Lissette family, the founding family and owners of Utz, will retain more than 90 percent of its existing equity stake, which will represent more than 50 percent ownership in Utz Brands upon completion of the transaction.
“As we approach our 100-year anniversary, we are excited to take this important step forward to position Utz for its next century of growth,” said Lissette. “This transaction enables Utz to continue its long-term growth plans and provides greater access to capital to fund organic and inorganic growth. We remain deeply committed to Utz’s continued success.
“We look forward to partnering with Roger and the seasoned team at Collier Creek as we leverage their experience in driving value creation in food platform companies. As a public company, I am confident that Utz will continue to grow its importance within the salty snack industry, bringing more of our brands to an ever-greater consumer audience across the U.S.,” Lissette said.
“Utz Brands is a phenomenal business combination that meets all of the criteria we established when we launched Collier Creek,” said Deromedi. “It’s a leading platform in the attractive and growing salty snack category, with significant competitive advantages and multiple opportunities to accelerate growth and drive value creation. We are confident that by supporting Dylan and the talented management team with our proven operating playbook, Utz can become the fastest-growing pure-play branded snack platform of scale in the U.S. We look forward to working with the Utz team in the years ahead.”
Key transaction terms
The transaction has been unanimously approved by the board of directors of Collier Creek, as well as the board of managers of Utz. The transaction is expected to close in the third quarter of 2020, subject to the satisfaction of customary closing conditions, including the approval of the shareholders of Collier Creek. Upon the closing of the transaction, Collier Creek will become a Delaware corporation and the name of Collier Creek will be changed to Utz Brands Inc.
The Rice and Lissette family will have more than 50% ownership in Utz Brands upon closing of the transaction. The remaining ownership will be held by the public shareholders and sponsor of Collier Creek. In connection with the transaction, Collier Creek’s sponsor and directors will invest approximately $35 million alongside public investors via a private placement pursuant to the forward purchase agreements entered into concurrent with Collier Creek’s initial public offering.
Assuming no redemptions by the public shareholders of Collier Creek, the approximately $453 million in cash held in Collier Creek’s trust account, together with the $35 million private placement, will be used to pay cash consideration to the current Utz owners, pay transaction expenses and reduce the company’s existing indebtedness to approximately 3.1x estimated 2020 Pro Forma Adjusted EBITDA.
The transaction will be structured as an Up-C where the continuing Utz owners will retain common units of a partnership managed by Utz Brands and an equal number of non-economic voting shares in Utz Brands. Utz Brands will also enter into a customary tax receivable arrangement with continuing Utz owners, which will provide for the sharing of tax benefits relating to certain pre-combination tax attributes, as well as tax attributes generated by the transaction and any subsequent sales or exchanges by the continuing Utz owners of their equity interests, as those attributes are realized by Utz Brands.
A more detailed description of the transaction terms will be included in a current report on Form 8-K to be filed by Collier Creek with the U.S. Securities and Exchange Commission (SEC).
Goldman Sachs and Sageworth are acting as financial advisors to Utz. Citigroup, Credit Suisse and BofA Securities are acting as capital markets advisors to Collier Creek. Citigroup and Credit Suisse are acting as lead financial advisors with BofA Securities and Nomura also serving as financial advisors to Collier Creek. Cozen O’Connor is acting as legal counsel to Utz and Kirkland & Ellis LLP is acting as legal counsel to Collier Creek.