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The financier that brought back the company behind treats such as Twinkies and Ding Dongs is investing more than $146 million in a 95-year-old, family-owned snack company.

Private-equity firm Metropoulos & Co., which brought Hostess Brands out of liquidation three years ago, is the first outside investor in Utz Quality Foods Inc., which makes potato chips, pretzels and cheese snacks under several brands. Metropoulos has also made bets on companies that produce Pabst Blue Ribbon beer, Bumble Bee Foods tuna and Chef Boyardee pasta over the years.

With $800 million in sales anticipated next year, Hanover, Penn.-based Utz is the largest privately held and family-run salty snack company in the U.S.

Mergers, acquisitions and investments in the food industry have been on the rise, as big food makers look to expand into brands that are perceived to be fresher and more natural.

The private-equity investment will be used to fund Utz's $146 million recent acquisition of Alabama-based chip and popcorn maker Golden Enterprises, according to Utz Chief Executive Dylan Lissette. The Rice family, which has owned and operated Utz for four generations and will remain the majority shareholders, has made several acquisitions in the past five years, such as Good Health pretzels and veggie straws and Zapp's kettle-style potato chips.

"Utz has quietly become a near century-old snack powerhouse," said principal Evan Metropoulos.

The food sector has seen rampant deal activity in the last couple of years. More than $116 billion worth of deals involving U.S. companies were announced last year, the largest total dollar amount in at least two decades, according to data from Dealogic. They include Hormel Foods' $775 million purchase of organic-meats company Applegate Farms LLC and Campbell Soup Co.'s $231 million acquisition of Garden Fresh Gourmet Inc. From January through June, more than $43 billion worth of food and beverage deals had been disclosed.

Daren Metropoulos, principal of Metropoulos, said the combination of growth potential and heritage makes Utz appealing to his firm, which specializes in expanding and reviving iconic American brands. Metropoulos says the Utz transaction is the largest initial private equity transaction for a U.S. snack company since 2013, when Metropoulos and Apollo Global Management bought Hostess out of liquidation at a deal, valued at $2.3 billion including cash, equity and debt. That deal required an initial cash investment of $185 million, The Wall Street Journal has reported.

As Hostess prepares to become a public company again, Metropoulos and Apollo stand to make returns of more than 10 times their original investment.

Write to Annie Gasparro at annie.gasparro@wsj.com

(END) Dow Jones Newswires

October 18, 2016 16:35 ET (20:35 GMT)

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