HANOVER, Pa. — Snack manufacturer Utz Quality Foods LLC and partner Heron Holding Corp. have entered into a definitive agreement to acquire Truco Enterprises, a seller of tortilla chips, salsa and queso under the On the Border brand, from Insignia Capital Group for a total purchase price of $480 million.
The acquisition includes all rights to the On the Border trademarks for use in the manufacture, sale and distribution of snack food products in the United States and certain other international markets.
“This strategic acquisition will make Utz a significant competitor in the tortilla chip subcategory, where On the Border holds the No. 3 position, and also provides us with a meaningful position in salsa, queso and dips,” said Dylan Lissette, CEO of Utz.
Utz expects the transaction to be accretive to earnings in 2021 and beyond. The transaction is expected to close in December 2020 and is subject to customary closing conditions including the receipt of regulatory approvals.
The tortilla chip subcategory is the No. 2 segment of salty snacks behind potato chips, with $6.2 billion retail sales, according to Utz.
Utz said it plans to use its sales, manufacturing and distribution platform to expand On the Border tortilla chips, salsa and queso into channels where the brand is under-penetrated, including grocery and convenience, and to increase marketing and innovation investments behind the brand.
“In combination with our small but growing premium Tortiyahs! brand, the integration of the On the Border brand will continue to improve Utz’s scale and product diversification, which are important success factors in salty snacks,” Lissette said. “This acquisition strengthens our competitive position, as well as our financial profile. We are confident this transaction will drive long-term value creation for our stockholders and help position us for continued long-term growth.”
Shane Chambers, CEO of Dallas-based Truco Enterprises, said he expects being part of “the Utz family of brands” will provide a sales boost for the company’s products.
“On the Border is now one of the fastest growing tortilla chip brands, and the fastest growing dip brand in the category,” he said. “Utz will be able to leverage its world class direct-store-delivery network to help expand our brand into new markets.”
The acquisition increases Utz’s presence in the mass and club channels, and expands Utz’s geographic presence, providing approximately $190 million of retail sales in Utz’s expansion and emerging geographies, the company said.
Utz Quality Foods LLC is a subsidiary of Utz Brands Inc., Hanover, Pa. Utz Brands manufactures a portfolio of savory snacks under brands including Utz, Zapp’s, Golden Flake, Good Health, Boulder Canyon, Hawaiian Brand and Tortiyahs!