Cott Corporation (TSX:BCB) entered into a definitive agreement to acquire Primo Water Corporation (NasdaqGM:PRMW) from directors, officers and others for approximately $570 million on January 13, 2020. Cott will acquire 10.4% of Primo equity from directors and officers of Primo who are beneficial owners. Cott will acquire Primo for $14 per share payable in cash and stock, or a combination of both, at the election of Primo's stockholders. Under the terms of the merger agreement, each share of Primo common stock will be exchanged for $5.04 in cash and 0.6549 common shares of Cott, or, at the election of Primo's stockholders, for $14 in cash or 1.0229 common shares of Cott. Any eligible shares not validly tendered will be cancelled and converted into the right to receive the same price per share offered in the exchange offer. Under the terms, each outstanding Primo share that was not acquired by Cott or the Purchaser (other than certain dissenting, converted and cancelled shares) will be converted into the mixed consideration or, at the election of the holder of such shares, the cash consideration or stock consideration, subject to proration to ensure that approximately 64.02% of the aggregate consideration in the first merger will be paid in Cott common shares and approximately 35.98% of the aggregate consideration in the first merger will be paid in cash. Cott will pay a total of approximately $216 million in cash to Primo stockholders, funded with the proceeds of a new term debt issuance or proceeds from the sale of S&D Coffee and Tea, and issue approximately 26.8 million new shares to Primo stockholders. Primo shareholders to own approximately 16% of the combined company. Cott has obtained financing commitments of up to $400 million from an affiliate of Deutsche Bank Securities Inc. to support the payment of the acquisition price and the refinancing of Primo's debt. Primo will operate as subsidiary of Cott after the close of the transaction and Primo shares will cease to be traded on Nasdaq. Cott intends to change its corporate name to “Primo Water Corporation” in connection with the closing of the transactions and to use the “PRMW” ticker symbol on both the NYSE and TSX thereafter. In the event of termination of agreement, Primo will pay a termination fee of $18.94 million based on 3.25% of Primo's equity value to Cott. As of February 26, 2020, a total of approximately 30,144,307 shares of Primo common stock were validly tendered and not properly withdrawn in the exchange offer. Billy D. Prim and Susan E. Cates, Board of Directors of Primo, will join Cott's Board following the closing of the transaction.

The transaction is subject to various conditions, including a minimum tender of a majority of outstanding shares of Primo common stock, expiration of waiting period under the HSR Act, Form S-4 shall have become effective under the Securities Act, approval of listing of shares to be issued in the offer on the NYSE and TSX along with and other customary conditions. The transaction was unanimously approved by both the Cott and Primo Boards of Directors. The transaction is expected to close in March 2020. The tender offer will expire on February 25, 2020. As of February 26, 2020, the offering period has been extended until February 28, 2020.

John Huntington and Sandeep Desai of Deutsche Bank Securities Inc. acted as financial advisors while Goodmans LLP and Matthew H. Meyers of Drinker Biddle & Reath LLP acted as legal advisor to Cott. The Goldman Sachs Group, Inc. (NYSE:GS) acted as financial advisor and fairness opinion provider whereas Sean M. Jones of K&L Gates LLP acted as legal advisor to Primo. MacKenzie Partners, Inc. acted as information agent and Computershare Trust Company of Canada acted as exchange agent for Cott Corporation. Primo and Goldman Sachs provides for a transaction fee that is estimated at approximately $12 million.