Family-Owned Food Giants Drive M&A Wave in US Snack Sector

A wave of acquisitions by family-owned food conglomerates is reshaping the U.S. snack industry, highlighted by the recent nearly $3 billion take-private deal for chip maker Utz Brands by Germany’s Intersnack Group. The move is the latest in a series of deals where private, often international, buyers are snapping up publicly traded American food companies they view as undervalued amid market pressures.

A Strategic Buying Opportunity

Family-backed food giants are capitalizing on what they perceive as attractive valuations for U.S. public companies. According to a Reuters report, investor concerns over the impact of weight-loss drugs, shifting consumer preferences, and persistent inflation have weighed on stock prices in the sector. Some food companies, including Campbell’s and Lamb Weston, have seen their market capitalizations shrink enough to be removed from the S&P 500 index this year.

This environment has created an opening for strategic buyers. "They want exposure to the U.S. market, and believe there’s some public market value dislocation, which in turn is being used as a buying opportunity," said Adam Taetle, Lazard’s global head of consumer and retail investment banking, in comments to Reuters. Other recent major deals include:

• Italy's family-owned Ferrero acquiring cereal maker WK Kellogg and protein snack brand Power Crunch.
• The Mars family's Mars, Inc. completing a blockbuster $36 billion take-private deal for Kellanova, maker of Pringles and Cheez-It.

The 'Generational Capital' Advantage

For the target companies, family-owned acquirers are often seen as more patient, long-term investors compared to private equity firms, which typically operate on shorter investment horizons. "These types of buyers are able to think generationally, which is a very different approach," Taetle noted.

Publicly traded acquirers and private equity firms also face other hurdles. Some are reportedly cautious about entering the salty snacks category due to the formidable competition from PepsiCo's Frito-Lay division. Furthermore, public buyers face intense shareholder scrutiny if a large acquisition falters. For instance, after J.M. Smucker acquired Hostess for $5.6 billion in 2023, it has since recorded $2.9 billion in impairment charges, and its shares have fallen 18% since the deal, as reported by Reuters.

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Market Impact and Valuations

The trend of private buyouts could establish a new baseline for valuations in the sector. A TD Cowen report on the Utz deal stated, “Quite possibly, this could help the market set a valuation floor for other ‘fallen stars’ in SMID-cap food and beverage.” The Utz acquisition was valued at roughly 12 times its core earnings (EBITDA).

Analysts see other potential targets that currently trade at lower multiples. The TD Cowen report cited BellRing Brands, trading below eight times next year’s EBITDA, and Simply Good Foods, trading below six times that figure, as examples of companies that could attract similar interest. For comparison, PepsiCo trades at around 12 times EBITDA.

Cross-Border Expansion

Many of these deals involve an international component, as foreign companies seek to enter the lucrative U.S. market and globalize their brands. Intersnack, which makes European crisp brands like Tyrells and Hula Hoops, aims to become a leading global player in salty snacks and better compete with PepsiCo.

With the Utz acquisition, Intersnack's sales are projected to grow from $5 billion in 2025 to a combined $6.6 billion. "We see a tremendous opportunity to partner and build on Utz’s strong foundation and help shape the future of snacking in North America," Intersnack’s executive chairman Johan van Winkel said in the deal announcement.