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Cott picking up Primo Water
Posted on Monday, 13 January 2020 15:23
Canadian beverage and food services provider Cott has signed on the dotted line to acquire Primo Water, the Nasdaq-listed provider of water dispensers and bottled water.
Under the terms of the transaction, the buyer will pay USD 5.04 in cash and issue 0.65 shares in itself per item of stock purchased.
This equates to an offer price of USD 14.22 per share, based on Cott’s close of USD 14.12 on 10th January, the last trading day prior to the deal being announced.
On these terms, a takeover of Primo would be worth USD 557.82 million.
Shareholders in the target can instead elect to receive either a USD 14.00 cash payment or 1.02 shares in Cott per item of stock acquired as consideration.
The acquisition will be financed using the proceeds of a new issuance of debt or from funds raised from the planned sale of S&D Coffee and Tea. An affiliate of Deutsche Bank has also provided financing commitments to the buyer.
Billy Prim, interim chief executive at Primo, noted that the newly-created business will have combined water sales of about USD 2.00 billion and a presence spanning 21 countries and will be able to reach more clients than any of the two companies could have separately.
Completion is slated to follow in March, subject to a majority stake being tendered as part of the offer, among other closing conditions.
Both companies’ boards have already given their unanimous seals of approval to the combination.
Commenting on the planned transaction, Cott chief executive Tom Harrington said: “The acquisition of Primo meets all of our quantitative and qualitative acquisition criteria, and we expect will increase revenue growth and EBITDA margins, be accretive to earnings per share and deliver a cash on cash IRR above our cost of capital.”
Harrington added that the purchase, and the planned sale of S&D, will result in the creation of a pure-play business which increases top-line growth and margins while driving long-term growth for shareholders.
Primo is described as the leading single source provider of water dispensers, multi-gallon purified bottled water and self-service refill drinking water in North America.
Its product range is available throughout the US and Canada.
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