Snyder's to acquire Utz in merger of Pa. neighbors
For almost a century, two homegrown companies have dominated the small Pennsylvania town of Hanover: Snyder's, famous for its pretzels, and Utz, an expert in potato chips. Sometimes the family-owned companies competed with new products, but for the most part, they co-existed - until this week.
After squaring off against other snack food makers in the fight for dominance on supermarket shelves and in the cupboards of Maryland consumers, the companies have announced a plan to join forces. Together, they would have more than $800 million in sales and 4,400 workers.
Snyder's of Hanover Inc., the country's largest maker of pretzels, said it would buy the smaller Utz Quality Foods Inc. for an undisclosed amount, pending a review of the sale by the Federal Trade Commission.
The companies, little more than an hour's drive northwest of Baltimore, have long supplied consumers here with pretzels and potato chips, as well as cheese curls and O-Ke-Doke popcorn.
The cartoonish "Utz girl" also is a well-recognized symbol - a local jeweler recently advertised engagement rings on billboards that featured her and the Natty Boh character.
Officials at the privately held companies would not comment on details of the deal and did not disclose any major changes. Both have factories in Hanover and extensive distribution networks for selling snacks across the Northeast and Mid-Atlantic regions.
"We're basically a pretzel company and they're basically a potato chip company, and we truly haven't looked at ourselves that closely as being competitors," said John Bartman, a Snyder's spokesman.
Plans for the companies' extensive product lines of pretzels and chips were not detailed, though company officials said in a statement that the Utz brand would continue.
Jeremy Diamond, a Baltimore-based retail and wholesale consultant whose family used to operate supermarkets in Maryland, said the Utz brand is "so deeply entrenched" that it would make sense for Snyder's to continue to sell those product lines - at least in the Mid-Atlantic region.
"Utz has been around here for a long time," Diamond said. "That's what consumers know. You like to stick with what the consumer knows and what is familiar."
Snyder's has 2,250 employees and had sales of $652 million last year; Utz has 2,200 employees and had revenue of $166 million last year, according to Hoovers.com.
The companies' largest competitor is Frito-Lay, which is owned by PepsiCo. Frito-Lay's revenues in North America alone were $12.5 billion last year, according to financial documents filed with the Securities and Exchange Commission.
Diamond believes Snyder's decided to buy Utz because of the poor economy, and the companies' realization that they needed to merge to compete with larger rivals. "It's a good move on Snyder's part," he said.
"As we develop our expanded portfolio of brands, we believe this will lead to additional sales and manufacturing jobs over time as we grow both brands and expand the new company," Carl E. Lee, Jr., Snyder's president and chief executive, said in a statement.
George Neiderer, an Utz spokesman, said he could not comment while the FTC reviews the deal.
But Diamond predicted that there would have to be job cuts as the two companies merge some operations.
Both companies have provided factory jobs in the Hanover area for decades, even as they grew increasingly automated. Hanover had about 15,000 residents, according to the 2000 Census.
Jason Policastro, 28, who works in media relations for a law school in Washington, said he moved from Baltimore to the town with his parents when he was 10 years old. He knew others whose fathers worked in the snack factories, and he spent two summers during college working at Snyder's, making pretzels for $11 an hour.
"It's not a big town, but it's certainly a factory town, and these two were certainly the biggest," Policastro said. "They call Hanover the snack food capital of the world."
Snyder's and Utz have operated as independent, family-run businesses since the early 1900s, building well-known brands across the Baltimore region, which served as an early market. Snyder's, according to a company history, traces its roots to 1909, when founder Harry Warehime started the Hanover Pretzel Co. Its current chairman, Michael Warehime, is a relative.
In the 1960s, Hanover Pretzel bought another pretzel bakery and potato chip maker - Snyder's, which itself had started as a small family business - and remade itself as Snyder's of Hanover.
Snyder's now has 1,800 distribution routes nationwide, and production facilities in Hanover, Pa., Jeffersonville, Ind., and Goodyear, Ariz. In Maryland, the company has distribution facilities in Frederick and on the Eastern Shore.
Utz has similar entrepreneurial roots. Using hand-operated equipment, William and Salie Utz began making and selling potato chips out of their Hanover home in 1921. William Utz quit a shoe factory job to launch the enterprise, Hanover Home Brand Potato Chips, with $300, and sold the snacks in markets in Hanover and Baltimore, according to the company Web site.
Utz has four factories in Hanover, makes 1 million pounds of chips and 900,000 pounds of pretzels each week, and distributes its snacks along 700 routes in 13 states, according to its Web site.
Today, its chairman and chief executive is Michael W. Rice, who took over the company from his father, F.X. Rice. The elder Rice got into the Utz family business when he married the daughter of the company's founders in 1938.
Snyder's of Hanover Inc.
Headquarters: Hanover, Pa.
Sales: $652 million (2008)
Products: Pretzels, kettle chips, popcorn
Utz Quality Foods Inc.
Headquarters: Hanover, Pa.
Sales: $166 million (2008)
Products: Potato chips, "natural" line of chips
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