Canada's Cott Corp. has agreed to acquire Primo Water Corp. for $14 per share in cash and stock, valuing Primo at approximately $775 million, according to a Jan. 13 release.
Primo Water provides water dispensers, purified bottled water and self-service refill drinking water in the U.S. and Canada.
The transaction was unanimously approved by both companies' boards, according to the release.
Under the deal, each Primo Water common share will be exchanged for $5.04 in cash and 0.6549 common shares of Cott, or $14 in cash or 1.0229 common shares of Cott at the election of Primo Water's stockholders.
Cott will pay a total of approximately $216 million in cash to Primo stockholders, which it said will come from the proceeds of a new term debt issuance or proceeds from the sale of S&D Coffee and Tea. It will also issue approximately 26.8 million new shares to Primo stockholders. The company has secured financing commitments of up to $400 million from an affiliate of Deutsche Bank Securities Inc.
Cott said the acquisition will allow it to become a pure-play water company following the divestment of its coffee and tea unit.
Primo Water will become a wholly-owned subsidiary of Cott, while Cott will rebrand its corporate name to Primo Water Corp. following the completion of the transaction.
Cott said it expects the acquisition will produce a pro forma third-quarter 2019 last-12-months revenue of around $2 billion and adjusted EBITDA of $324 million.
"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," Tom Harrington, CEO of Cott, said in a statement.