TORONTO and TAMPA, FL, July 25,
2017 /PRNewswire/ - Cott Corporation (NYSE:COT; TSX:BCB)
today announced that it has entered into a definitive agreement to
sell its traditional beverage manufacturing business ("Cott
Beverages") to Refresco (Euronext: RFRG) for USD $1.25 billion. The transaction includes
Cott's North America, U.K., and
Mexico businesses (excluding the
RCI International division and its associated concentrate facility
as well as the Aimia Foods division).
For over 60 years Cott Beverages has been a leading
manufacturer of a diverse mix of beverages for
the retail trade and branded manufacturers
and is one of the world's largest producers of beverages
on behalf of retailers, brand owners and
distributors, producing multiple types of beverages in a
variety of packaging formats and sizes, including carbonated soft
drinks, 100% shelf stable juice and juice-based products, energy
drinks, clear, still and sparkling flavored
waters, sports drinks, new age beverages, ready-to-drink teas,
freezables and ready-to-drink alcoholic beverages. Cott
Beverages has been known for its excellent customer service
and superb quality standards as demonstrated by the many retail and
product performance awards received over the years, and has
consistently offered its customers a strong value-added
proposition of low cost, high quality products while
generating strong free cash flows.
"After a thorough strategic review in 2013, we developed an
accelerated diversification and acquisition strategy in order to
transform our company and create a business weighted towards better
for you products in categories with topline growth, a
more diverse channel and customer base, higher margins, and
strong free cash flow generation. This transaction is
very much in line with this strategy, and
enables our traditional business to become an
integral part of a larger global beverage manufacturing
company that pursues the same high customer
service and quality standards Cott has been known
for throughout its history", commented Jerry Fowden
Cott's Chief Executive Officer.
Cott Beverages generates approximately $1.7 billion in revenues and has a strong and
experienced management team with longstanding customer
relationships in North America and
the United Kingdom. Subsequent to
the closing of the transaction, Cott Beverages' leadership team
will report to the Executive Board of Refresco.
"We are excited to welcome Cott Beverages to the Refresco
family. We have been focused on growing our platform in both
North America and Europe and this transaction is a significant
enhancement to our buy and build strategy which will provide
Refresco with enlarged scale, synergies, and savings alongside
Refresco's manufacturing footprint, geographic diversity, product
range and customer service," commented Hans
Roelofs, Refresco's Chief Executive Officer. "We will now
have a well-balanced portfolio with exposure to all categories for
retailers in North America and
Europe in addition to a scale
contract manufacturing footprint throughout these geographies from
which to continue to grow both organically and by pursuing our buy
and build strategy," continued Mr. Roelofs.
STRATEGIC RATIONALE
"The sale of Cott's traditional business substantially
accelerates our ability to deleverage the business and
positions us well to grow our water, coffee, tea and
filtration businesses both organically and through value
accretive tuck-in acquisitions while also giving us the
optionality to expand our platforms through larger scale
acquisitions if and when the right value
enhancing opportunities present themselves," continued
Mr. Fowden.
The transaction is expected to:
- Improve top-line growth and stability
- Enhance overall gross profit and EBITDA margins
- Significantly reduce net leverage
- Reduce customer concentration
- Reduce commodity exposure
- Shift Cott's core focus to the growing categories of water,
coffee, tea and filtration
The transaction is expected to reduce Cott's leverage
to below 3.5x net debt to 2017 pro forma
adjusted EBITDA (excluding Cott Beverages) after sale
proceeds are used for the redemption of the remaining $250 million of our 10% DS senior secured notes,
$525 million of our 5.375% notes, and
paying off our asset-based lending facility. As a result of
the redemption of our 5.375% notes, we expect to commence asset
sale proceed offers on or about the closing date of the transaction
pursuant to the indentures governing our then remaining unsecured
notes, pursuant to which we will offer to repurchase such notes at
100% of the principal amount thereof.
The acquisition, which is expected to close in the second
half of 2017, is subject to certain closing conditions
including regulatory approval, Refresco shareholder
approval, and working capital adjustments.
Barclays acted as financial advisor to Cott
while Drinker Biddle & Reath LLP acted as legal
advisor. In addition, Cott turned to CMS for advice on Dutch law
matters relating to the transaction.
TRANSACTION CONFERENCE CALL
Cott Corporation will host a conference call today, July 25, 2017, at 8 a.m.
EST, to discuss the sale, which can be accessed as
follows:
North America: (888)
231-8191
United Kingdom: 0-800-051-7107
International: (647) 427-7450
Conference ID: 58688747
A copy of the slide presentation that will be used on the call
will be available through Cott's website at www.cott.com. The
conference call will be a live audio webcast available via the
above referenced link and it will be recorded and archived for
playback for a period of two weeks following the call.
ABOUT COTT CORPORATION
Cott is a diversified beverage company with a leading
volume-based national presence in the North America and European home and office
bottled water delivery industry, a leader in custom coffee roasting
and blending of iced tea for the U.S. foodservice industry, and one
of the world's largest producers of beverages on behalf of
retailers, brand owners, and distributors. Our platform
reaches over 2.3 million customers or delivery points across
North America and Europe supported by strategically located
sales and distribution facilities and fleets, as well as
wholesalers and distributors. This enables us to efficiently
service residences, businesses, restaurant chains, hotels and
motels, small and large retailers, and healthcare facilities.
ABOUT REFRESCO CORPORATION
Refresco (Euronext:RFRG) is the leading independent bottler of
soft drinks and fruit juices for retailers and A-brands with
production in Benelux, Finland,
France, Germany, Italy, Poland, Spain, the UK and the US. The company
realized in 2016 full year volumes and revenues of circa 6.5
billion liters and circa €2.1 billion, respectively. Refresco
offers an extensive range of product and packaging combinations
from 100% fruit juices to carbonated soft drinks and mineral waters
in carton, PET, Aseptic PET, cans and glass. Focused on
innovation, Refresco continuously searches for new and alternative
ways to improve the quality of its products and packaging
combinations in line with consumer and customer demand,
environmental responsibilities and market demand. Refresco is
headquartered in Rotterdam, the
Netherlands and has about 5,500 employees.
Non-GAAP Measures
To supplement its reporting of
financial measures determined in accordance with GAAP, Cott
utilizes certain non-GAAP financial measures, including EBITDA,
adjusted EBITDA and net debt (and certain ratios utilizing these
measures) to separate the impact of certain items from the
underlying business. Because Cott uses these adjusted
financial results in the management of its business, management
believes this supplemental information is useful to investors for
their independent evaluation and understanding of Cott's underlying
business performance and the performance of its management.
The non-GAAP financial measures described above are in addition to,
and not meant to be considered superior to, or a substitute for,
Cott's financial statements prepared in accordance with GAAP. In
addition, the non-GAAP financial measures included in this earnings
announcement reflect management's judgment of particular items, and
may be different from, and therefore may not be comparable to,
similarly titled measures reported by other companies.
Safe Harbor Statements
This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934 conveying management's expectations as to the future
based on plans, estimates and projections at the time Cott makes
the statements. Forward-looking statements involve inherent risks
and uncertainties and Cott cautions you that a number of important
factors could cause actual results to differ materially from those
contained in any such forward-looking statement. The
forward-looking statements contained in this press release include,
but are not limited to, statements related to the use of proceeds,
the completion of the transaction on the terms proposed, the
anticipated timing of the transaction, the potential impact the
acquisition will have on Cott and related matters, and the
execution of our strategic priorities. The forward-looking
statements are based on assumptions regarding management's current
plans and estimates. Management believes these assumptions to be
reasonable but there is no assurance that they will prove to be
accurate.
Factors that could cause actual results to differ materially
from those described in this press release include, among others:
the satisfaction of the conditions to the transaction and other
risks related to the completion of the transaction and actions
related thereto; Cott's and Refresco's ability to complete the
transaction on the anticipated terms and schedule, including the
ability to obtain shareholder and regulatory approvals; risks
relating to any unforeseen changes to or effects on liabilities,
future capital expenditures, revenues, expenses, earnings,
synergies, indebtedness, financial condition, losses and future
prospects; the risk that disruptions from the transaction will harm
Cott's business; and the effect of economic, competitive, legal,
governmental and technological factors on Cott's business.
The foregoing list of factors is not exhaustive. Readers are
cautioned not to place undue reliance on any forward-looking
statements, which speak only as of the date hereof. Readers are
urged to carefully review and consider the various disclosures,
including but not limited to risk factors contained in Cott's
Annual Report on Form 10-K and its quarterly reports on Form 10-Q,
as well as other filings with the securities commissions. Cott does
not undertake to update or revise any of these statements in light
of new information or future events, except as expressly required
by applicable law.
Website: www.cott.com
SOURCE Cott Corporation