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Cott Acquires Primo Water For 775M Rebrands With Transition To Pure-Play Water Solutions Provider

TORONTO --- Cott Corp. has agreed to acquire Primo Water Corp. in a deal valued at $775 million. Winston-Salem, NC-based Primo is a leading provider of water dispensers, purified bottled water and self-service refill drinking water in the U.S. and Canada. Cott will rebrand as Primo Water Corp. upon the close of the transaction, which is expected in March. The combination of Cott and Primo, along with Cott's recent announcement of its plans to sell its S&D Coffee and Tea business, will transition Cot...

January 15, 2020 by Emily Jed

TORONTO --- Cott Corp. has agreed to acquire Primo Water Corp. in a deal valued at $775 million. Winston-Salem, NC-based Primo is a leading provider of water dispensers, purified bottled water and self-service refill drinking water in the U.S. and Canada. Cott will rebrand as Primo Water Corp. upon the close of the transaction, which is expected in March.

The combination of Cott and Primo, along with Cott's recent announcement of its plans to sell its S&D Coffee and Tea business, will transition Cott into a pure-play water company. Cott bought S&D for $355 million in August 2016. The newly created company will have approximately $2 billion in combined water sales and a presence in 21 countries worldwide. 

Cott is a leader in the North American and European home and office delivery industry for bottled water, and a leader in custom coffee roasting, iced tea blending and extract solutions for the U.S. foodservice industry. It reportedly reaches more than 2.5 million customers or delivery points across North America and Europe and is supported by strategically located sales and distribution facilities and fleets, as well as wholesalers and distributors. It serves businesses, restaurant chains, hotels and motels, small and large retailers and healthcare facilities.

"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," said Primo Water Corp. chief executive Tom Harringon. "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."

"We are excited about the opportunity to provide sustainable hydration solutions to more people than either company could have done alone," added Billy D. Prim, Primo's interim chief executive and executive chairman.

Cott's said its acquisition of Primo and Cott's continued transition into a pure-play water solutions provider is expected to: 

>> Provide a singular water-focused company, positioned to succeed in higher growth and higher margin water categories as a rebranded entity with the opportunity to be revalued in line with our water peers.

>> Expand channel diversification and consumer reach with the ability to offer Primo's products and services across Cott's 21-country footprint as well as increase route density and geographic footprint in refill/filtration.

>> Strengthen the company through continued product and service innovation, marketing partnerships, and accretive tuck-in acquisitions all built on a sustainable long-term growth platform.

>> Provide cost synergies of approximately $35 million over a three-year period.

Under the terms of the merger agreement, a wholly owned subsidiary of Cott will promptly commence an exchange offer to acquire all of the outstanding shares of Primo's common stock, and each share of Primo common stock will be exchanged for $5.04 in cash and 0.6549 common shares of Cott, or, at the election of Primo's stockholders, for $14 in cash or 1.0229 common shares of Cott, subject to the proration procedures set forth in the merger agreement. 

Following consummation of the exchange offer, that subsidiary will merge with and into Primo and Primo will become a wholly owned subsidiary of Cott. Upon completion of the acquisition, Primo shares will cease to be traded on Nasdaq.

Cott will pay a total of approximately $216 million in cash to Primo stockholders, funded with the proceeds of a new term debt issuance or proceeds from the sale of S&D Coffee and Tea, and issue approximately 26.8 million new shares to Primo stockholders. Cott has obtained financing commitments of up to $400 million from an affiliate of Deutsche Bank Securities Inc. to support the payment of the acquisition price and the refinancing of Primo's debt.

Billy D. Prim and Susan E. Cates, current members of Primo's board of directors, will join Cott's board following the closing.