Refresco Acquires Cott’s Bottling Activities

Refresco, an independent bottler of beverages for retailers and A-brands in Europe and the US, today announces the acquisition of the bottling activities of Cott. Cott is a diversified beverage company and one of the world’s largest producers of beverages on behalf of retailers, brand owners and distributors. Its bottling activities, with revenues of approximately USD 1.7 billion, comprise 47% of its total activities. The purchase price is USD 1.25 billion (equal to EUR 1.1 billion), payable in cash. Included in the purchase price is a tax asset of USD 75 million.

Excluding the tax asset, the purchase price represents a multiple of 8.6 times adjusted EBITDA of the bottling activities realized over FY 2016. Post synergies, the purchase multiple comes down to approximately 6 times adjusted EBITDA, in line with the average level realized in previous transactions. The acquisition is expected to be earnings accretive by approximately 5% in the first full year of consolidation.

Strategic highlights

• Refresco has entered into an agreement with Cott to acquire Cott’s bottling activities for USD 1.25 billion (EUR 1.1 billion)
• Transaction unanimously recommended and supported by Refresco’s Executive Board and Supervisory Board
• Cott’s bottling activities are comprised of a leading beverage platform with a full portfolio of non-alcoholic beverages, focussed on retailer brands and contract manufacturing
• Profitable business with healthy margins and strong free cash flow; 2016 revenues of USD 1.7 billion, adjusted EBITDA of USD 136.5 million and customer relationships with over 500 leading retailers
• This acquisition is a transformational deal right at the heart of Refresco’s buy & build strategy
• Creating largest independent bottler for retailers and A-brands in Europe and North America with a combined production volume of approximately 12 billion liters
• Adding 19 production sites in the US, 4 in Canada, 1 in Mexico and 5 in the UK
• Significant synergy potential with around EUR 47 million to be attained within 3 years of closing
• Customers will have access to enhanced global network combining Refresco’s strong European capabilities and Cott’s strength in North America
• A well-balanced portfolio with exposure to all categories for retailers
• Strengthened contract manufacturing exposure with unique geographical spread for branded players

Transaction highlights

• Refresco will finance the acquisition with debt, for which it has fully underwritten facilities, and intends to bring down leverage over time
• Refresco intends to issue around EUR 200 million in new shares within 12 months of closing to support its financial strength
• Completion of the transaction envisaged in the second half of 2017
• The transaction is subject to customary conditions, including anti-trust approval in various jurisdictions and Refresco shareholder approval
• Integration will start immediately after closing with the UK, representing around 30% of Cott’s business, being integrated into Refresco Europe and the North American organization being combined with Refresco US
• Extraordinary General Meeting of Shareholders to be convened today and held on September 5, 2017

Source: Refresco

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