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Stacy's Pita Chip Co. Is Being Sold to a Unit of PepsiCo.

Posted on: Tuesday, 22 November 2005, 15:00 CST

By Jenn Abelson, The Boston Globe

Nov. 22--The snack food entrepreneurs who turned a sandwich cart in downtown Boston into a $60 million company are selling their business, Stacy's Pita Chip Co., to food and beverage giant PepsiCo Inc.

Stacy Madison, cofounder of Stacy's, said yesterday that the top-selling maker of pita chips will keep its headquarters in Randolph and operate as a separate unit that will report to Frito-Lay North America, a division of Pepsi. No layoffs are expected, and terms of the deal were not disclosed.

"We've been in the business for nine years and are growing very fast, " Madison, 40, said. "We've brought it this far and would like to see it go further."

Stacy's, founded in 1997 by Madison and ex-husband Mark Andrus, is an all-natural snack company whose pita chips and soy crisps have no cholesterol or transfats. Last year, the Greater Boston Chamber of Commerce named it the small business of the year. Analysts and company officials say Stacy's will help Frito-Lay expand into the fast-growing market for healthier snack foods.

"Stacy's enables Frito-Lay to be a leader in the pita chips category, while supporting our plans to expand our snack offerings to meet consumers' changing needs and lifestyles," Irene Rosenfeld, Frito-Lay chairman and chief executive, said in a statement.

Rosenfeld visited Stacy's headquarters yesterday, and according to Madison, promised employees to keep intact the company's offbeat and relaxed corporate culture. Signs on the front door tell visitors: "No ties allowed." Two dogs -- both bull mastiffs -- roam around the office, which is furnished with mismatched desks and chairs.

The deal with chip champion Frito-Lay comes as Stacy's expects sales to more than double this year to $60 million from $28 million last year. The pita-chip maker recently moved into a building that is nearly 10 times bigger than its former facility, also in Randolph. It's a far cry from Stacy's push-cart beginnings, when Madison and Andrus served roll-up sandwiches and gave free pita chips to customers who waited in lines that grew longer each day.

About six months ago, Stacy's began pursuing buyers and received at least five offers from financial institutions and major food companies. Madison said Frito-Lay is best equipped to get Stacy's pita chips and soy crisps into more stores across the country and to create more products under the Stacy's name.

"Consumers are wanting healthier and better-for-me snack options," said Dennis Lombardi, executive vice president of food service strategies for design-development firm WD Partners in Columbus, Ohio. "This makes Stacy's an attractive company for Frito-Lay."

In 2002, Frito-Lay eliminated transfats and hydrogenated oils from some of its most popular snacks, including Doritos, Tostitos, and Cheetos. Stacy's pita chips, which come in five flavors, will qualify for PepsiCo's "Smart Spot," a label on select products that meet nutrition criteria based on recommendations from the Food and Drug Administration and the National Academy of Sciences.

The deal still requires regulatory approval. A Frito-Lay spokesman said the auisition is expected to be completed in early December.

Madison and Andrus plan to stay on during the transition, at least for a few months, and then work as consultants for Frito-Lay over the next several years.

"This tiny little company is now part of Frito-Lay. It's a great career move and will be a tremendous benefit to all of our consumers looking for us in stores," Madison said. "For us, this is a celebratory day."

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PEP,

Source: The Boston Globe

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