TAMPA, FL, U.S. – Cott Corporation has announced the completion of the acquisition of Primo Water Corporation (“Primo”), a leading provider of water dispensers, purified bottled water, and self-service refill drinking water in the U.S. and Canada.
The acquisition of Primo is consistent with Cott’s strategy of transitioning to a pure-play water solutions provider. Primo is a growing business with over $300 million in 2019 revenues. The acquisition adds further density to the distribution platform of Cott’s existing North American business by adding leading scale water solutions businesses to its portfolio. The transaction is expected to increase revenue growth and EBITDA margins, be accretive to earnings per share and deliver a cash on cash IRR above our cost of capital.
Cott has conducted an exchange offer by its wholly-owned subsidiary, Fore Acquisition Corporation (“Purchaser”), for all of the outstanding shares of common stock of Primo. The consideration is $14.00 per share, payable in cash, stock, or a combination thereof at the election of Primo’s stockholders, subject to the terms of the merger agreement. The transaction values Primo at approximately $775 million.
As a part of the transaction, Cott will change its name to Primo Water Corporation and its common shares will trade under the ticker PRMW on the NYSE and the TSX.
“The Primo acquisition is another great step in our strategy to become a pure-play water solutions provider with financial metrics more in line with our peers,” said Tom Harrington, Cott’s Chief Executive Officer. “We firmly believe that our combined businesses will drive significant value for our shareholders over the coming years,” continued Mr. Harrington.
Deutsche Bank Securities Inc. acted as financial advisor to Cott and Faegre Drinker Biddle & Reath LLP and Goodmans LLP provided legal counsel to Cott. Goldman Sachs acted as financial advisor to Primo and K&L Gates LLP provided legal counsel to Primo.
Exchange Offer Details
The depositary and paying agent for the exchange offer has advised that, as of 5:00 p.m., New York City time, on February 28, 2020, the expiration of the exchange offer, 32,716,138 shares of common stock of Primo were tendered pursuant to the exchange offer, representing approximately 81.1% of the issued and outstanding shares of common stock of Primo. The condition to the exchange offer that at least a majority of the issued and outstanding shares of Primo (as determined pursuant to the merger agreement) be validly tendered and not validly withdrawn and all other conditions to the exchange offer have been satisfied. Accordingly, Purchaser has accepted payment and will promptly pay the depositary for all validly tendered shares.
Of the shares tendered into the exchange offer, 1,228,402 shares made an election to receive the mixed consideration, 393,517 shares made an election to receive the all-cash consideration, and 31,094,219 shares made an election to receive the all-stock consideration.
- Primo stockholders who elected to receive the mixed consideration or tendered without a valid election will receive the mixed consideration, which consists of $5.04 in cash and 0.6549 Cott common shares per share of Primo common stock;
- Primo stockholders who elected to receive the all-cash consideration will receive $14.00 in cash per share of Primo common stock; and
- Primo stockholders who elected to receive the all-stock consideration will be subject to proration at a rate of approximately 67.4% and will receive their consideration in the form of $14.00 in cash for each share not accepted for the all-stock election due to proration and 1.0229 Cott common shares per share of Primo common stock for shares that were accepted for the all-stock election.
Primo stockholders will receive cash in lieu of fractional shares. As a result of the acquisition, shares of Primo common stock will cease to be traded on the NASDAQ.
Following Purchaser’s acceptance of the Primo shares tendered in the exchange offer, Cott completed the acquisition of Primo on March 2, 2020 through a merger under Section 251(h) of the General Corporation Law of the State of Delaware (the “DGCL”). All remaining shares of Primo common stock not tendered pursuant to the exchange offer (other than shares of Primo common stock (a) held in the treasury of Primo or owned by any direct or indirect wholly owned subsidiary of Primo, (b) owned by Purchaser, Cott or any direct or indirect wholly owned subsidiary of Cott, and (c) in respect of which appraisal rights were perfected in accordance with Section 262 of the DGCL) were canceled in the merger and converted into the right to receive the merger consideration in the same amounts offered in the exchange offer. Holders of these shares will have the opportunity to elect among the mixed consideration, the all-cash consideration and the all-stock consideration, subject to proration, as described in the prospectus/offer to exchange, dated February 18, 2020, filed by Cott with the Securities and Exchange Commission in connection with the transaction.