“As the clear leader in private label shelf-stable juice, Cliffstar is an ideal partner for Cott as we strengthen our position in private label beverages,” said Jerry Fowden, chief executive officer of Cott. “A combination with Cliffstar expands Cott’s product portfolio and manufacturing capabilities, enhances our customer offering and growth prospects, and improves our strategic platform for the future.
“Combined with Cliffstar, Cott will be a more diversified company with long-term advantages for our shareowners and retailer partners.”
In addition to the $500 million due at signing, Cliffstar is entitled to $14 million of deferred consideration, which will be paid over a three-year period. Cliffstar is also entitled to an additional contingent earnout consideration of up to a maximum of $55 million, based upon the achievement of certain performance measures during the fiscal year ending 1 January 2011 as well as the successful completion of certain expansion projects in 2010.
Cott expects to receive a significant cash tax benefit generated from the deduction of the step-up in tax basis resulting from the acquisition of Cliffstar’s assets. The net present value of this cash tax benefit is estimated to be approximately $75 million.
Source: Cott Corporation
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