Utz Quality Foods, the Hanover, PA-based manufacturer of salty snacks, announced that it has entered into a definitive agreement with special purpose acquisition company (SPAC) Collier Creek Holdings to combine and form Utz Brands, Inc. It is expected that the newly combined company, which will be a leading pure-play snack food platform in the U.S., will trade under the ticker symbol “Utz” on the New York Stock Exchange once the transaction is completed in the third quarter of 2020.
Dylan Lissette, who first joined Utz in 1995 and has served the snack firm’s CEO since 2013, will continue to serve in that role to lead the business along with the existing management team. Roger Deromedi, former chairman of Pinnacle Foods and ex-Kraft Foods CEO will become chairman of Utz Brands. Deromedi co-founded the Manhattan based “blank check” investment firm along with Chinh Chu and Jason Giordano in 2018.
Utz Brands will remain headquartered in Hanover.
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.
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. Collier Creek will become a Delaware corporation and the name of Collier Creek will be changed to Utz Brands, Inc. In addition
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 entity called 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.
Utz has been expanding rapidly over the past decade, acquiring other snack food companies as well as manufacturing plants and distribution centers. In 2009, the company was close to merging with rival Snyder’s of Hanover (now Snyder’s-Lance, a division of Campbell’s). In October 2016, it sold a minority stake to private equity firm Metropoulos & Co to help with the acquisition of Golden Flake Foods, a large snack food manufacturer based in Birmingham, AL. Fifteen months later, Utz reacquired those shares.