Utz Brands to sell Lititz facility in $182.5M deal

Utz Brands Inc. of Hanover is selling its Lititz manufacturing facility to a New Jersey-based snack food company in a deal worth $182.5 million. 

The deal, which includes the sale of Utz’s Lititz and Lincolnton, North Carolina facilities and the lease of its Las Vegas, Nevada manufacturing operations to Our Home, of Boonton, New Jersey, is expected to close Feb. 5, Utz Brands said in a press release. The deal includes the sale of Utz’s Good Health and R.W. Garcia brands. 

Proceeds from the sale will allow the company to pay down its long-term debt, Utz said. No jobs will be lost in the transaction. 

Following the closing, Utz and Our Home, an operating company of Better-for-You brands that includes Real Food From the Group Up, Popchips, and Food Should Taste Good, will operate under a Transition Services Agreement for 12 months.  

The two companies will also operate under reciprocal co-manufacturing agreements under which Our Home will co-manufacture certain Utz products and Utz will co-manufacture certain Good Health products, the company said.  

Utz said certain Good Health products will continue to be distributed and sold on the Utz direct store delivery network for Our Home.  

“Our Home plans to continue to operate and grow the brands and manufacturing facilities under its platform while offering employment to Utz associates working in those facilities as part of the transition,” Good Health 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 optimize for growth,” said Howard Friedman, CEO of Utz. “With this important step in the optimization 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 U.S. and deliver on our margin target.” 

Utz said the transactions are expected to provide about $150 million in after-tax net proceeds, which Utz will use to pay down its long-term debt.  

The debt reduction is expected to lower interest expense by approximately $12 million in fiscal 2024 and to accelerate the company’s plan for achieving its target of approximately 3.0x Net Leverage by a full year from the end of fiscal 2026 to the end of fiscal 2025, Utz said. 

“On behalf of everyone at Utz, I would like to thank our associates within the Good Health and R.W. Garcia businesses for their many contributions,” Friedman said. “They have a great place within Our Home, and I am confident they will have exciting opportunities ahead.”