TORONTO — Cott Corp. has reached an agreement to acquire Primo Water Corp. for approximately $775 million. Primo is a single-source provider of water dispensers, multi-gallon purified bottled water and self-service refill drinking water. The acquisition, combined with Cott’s announcement earlier this month that it is exploring strategic alternatives for its S&D Coffee and Tea business, is part of Cott’s broader effort to transition into a pure-play water company.
Cott said it plans to change its corporate name to Primo Water Corp. and its ticker symbol to PRMW.
Thomas J. Harrington, chief executive officer of Cott Corp., in a Jan. 13 conference call with analysts said the new business “will deliver higher growth and higher margins, more consistent with our water and route-based peers.”
Commenting on the pending name change, Mr. Harrington said the Primo name is associated with “sustainable, healthy hydration,” while the current Cott name “continues to be linked to our former sugary-sweetened beverage business.”
“Over the last six years, we’ve been very busy transforming our company from what was once a low-margin business with declining revenues to a higher-margin business with strong revenue growth,” Mr. Harrington said. “We are moving toward becoming the leading pure-play water service provider across our 21-country footprint with mid-single-digit top-line growth with all of our core channels expected to grow and a high teen EBITDA margin profile. This has been a well-planned transformation, and both management and our board have been aligned throughout the process.”
The announcement that Cott is transitioning to a pure-play water company comes less than a week after the company said it is evaluating certain strategic alternatives for S&D Coffee and Tea, including a sale of S&D. S&D is the U.S. market leader in custom coffee roasting and the largest blender of iced teas for food service and convenience stores in the United States. S&D is also a leader in the high growth category of extracts and ingredients.
Cott acquired S&D in 2016 for approximately $355 million. At the time, then Cott-c.e.o. Jerry Fowden said the acquisition of S&D would enable Cott to become a leading player in the coffee and tea categories.
Predominantly a carbonated soft drink manufacturer for most of its nearly 100-year history, Cott sold its traditional beverage manufacturing business to Refresco for $1.25 billion in 2018. In 2019, the company sold its soft drink concentration production facility and RCI International division to Refresco for $50 million, a move that effectively removed Cott from the carbonated soft drinks business.