Intersnack Group To Acquire UTZ Brands

Research evidence excerpt

Intersnack Group To Acquire UTZ Brands

Forecast returns

Forecast price appreciation 1.2%

Forecast dividend yield 1.2%

Forecast stock return 2.4%

Market return assumption 9.2%

Forecast excess return -6.8%

Company Description

UTZ Brands is a U.S. based packaged food company specializing in salty snacks, with a

portfolio that spans traditional and better-for-you offerings. The company primarily

manufactures potato chips, tortilla chips, pretzels, cheese snacks, and pork rinds, sold under

well-known brands such as Utz, Zapp's, On The Border, and Boulder Canyon. UTZ operates

primarily in the U.S., with a stronghold in the Northeast and parts of the Southeast (core

markets) and a growing presence in the West (expansion markets). UTZ reports under two

segments: Branded Salty Snacks and Non-Branded salty snacks and non-salty products.

Valuation Method and Risk Statement

1) Intensifying Branded Competition: PepsiCo, through its Frito-Lay division, remains a

dominant player in salty snacks. Given the low demand environment, any shift in PepsiCo's

promotional strategy - especially if it becomes more aggressive could pose challenges for UTZ.

2) Inflation: Fluctuations in the cost of key inputs such as cooking oils, potatoes, and

packaging materials could pressure COGS over a near and medium term basis.

3) Retailer Dynamics: Consolidation among key retailers or changes in shelf space allocation

could impact UTZ's visibility and pricing power, in both core and expansion regions.

4) Consumer preference: UTZ sales could be negatively impacted by change in consumer

perception towards more nutritional products

5) GLP-1 Impact on Consumption: Growing adoption of GLP-1 drugs may lead to reduced

snacking frequency posing longer-term headwinds for the salty snacks category.