©Primo Water Corporation
Cott Corporation has entered into an agreement to acquire Primo Water Corporation, in a transaction that values Primo at approximately $775 million.
Following completion of the deal, Primo will become a wholly-owned subsidiary of Cott, while Cott will reportedly rebrand its corporate name to Primo Water Corporation.
Under the terms of the agreement, Cott will pay a total of approximately $216 million in cash to Primo stockholders, which it says it will fund with proceeds from the potential sale of its S&D Coffee and Tea division.
Cott will also issue approximately 26.8 million new shares to Primo stockholders and obtain a loan of up to $400 million from an affiliate of Deutsche Bank Securities.
Active in the US and Canada, Primo is a provider of water dispensers, purified bottled water and self-service refill drinking water.
The merger agreement of Cott and Primo, along with the divestiture of its coffee and tea unit will help Cott transition into a pure-play water company.
As a result of becoming a water-focused company, Cott says it will be positioned to succeed in higher growth, expand consumer reach with the additions of Primo’s products and services to its portfolio, and increase its geographic footprint with presence in 21 countries.
Billy D. Prim, Primo’s interim CEO and executive chairman, said: “We are excited about the opportunity to provide sustainable hydration solutions to more people than either company could have done alone.”
Primo removed Matt Sheehan as the company’s president and CEO last year, as he failed to meet performance expectations.
According to Cott, the merger will create a company with an estimated pro forma LTM revenue of approximately $2 billion.
Tom Harrington, Cott’s CEO said: “I am excited, as the acquisition of Primo and planned sale of S&D will result in a pure-play water company that increases top-line growth and margins and drives long-term value creation for our shareholders.
“As we turn to our new business model, we are taking the opportunity to rebrand our company as Primo Water Corporation to reflect the leading position we have in the growing and attractive water market with the opportunity to be revalued in line with our water peers. As Primo and Cott have been strategic partners for six years, we expect a smooth transition and integration.”
The acquisition follows a series of investments by Cott in the last few months, including the purchase of the Watercooler Gigant business of Leylines, bottled water supplier Viteau and The Water Guy, a US-based provider of water and office coffee service solutions.
The agreement is subject to customary conditions and is expected to close in March 2020.
© FoodBev Media Ltd 2020