Cott Corp. Canada's biggest soft-drink maker, is acquiring a major U.S. private-label juice company for more than half-a-billion dollars.
Cott said late Wednesday it has signed an agreement to acquire privately owned Cliffstar Corp., based in Dunkirk, N.Y., near Buffalo.
Cliffstar will receive $500-million in cash when the deal closes, and another $14-million over the next three years. Cliffstar is also entitled to an additional payment of up to $55-million if it meets certain performance targets.
Cott CEO Jerry Fowden said the acquisition will combine the No. 1 private-label soft-drink manufacturer with the No. 1 private-label juice maker, and will turn Cott into a larger, more balanced business, with pop, water and juice operations.
"A combination with Cliffstar expands Cott's product portfolio and manufacturing capabilities, enhances our customer offering and growth prospects, and improves our strategic platform for the future," Mr. Fowden stated.
"We expect the combination with Cliffstar to be accretive to our shareholders on a cash basis."
"In Cott, we have found the right long-term strategic partner for Cliffstar," added Stanley Star, chairman and co-founder of Cliffstar. "I believe the combination will be beneficial for Cliffstar's employees, customers and suppliers into the future."
Cott said it expects to realize $20-million in annual cost efficiencies through the deal, plus an immediate tax benefit of about $75-million.
It expects to fund the costs of the acquisition by up to $375-million in new corporate debt, a $95-million share issue and $75-million in additional borrowing.
Cliffstar has 1,200 employees and operates 11 plants in the U.S., including five bottling and distribution operations, three fruit processing plants, two fruit receiving stations and one storage depot. It had $654-million in revenue in the past 12 months.
Cott said its trailing 12-month global consolidated revenue, factoring in the acquisition, would total $2.3-billion and its trailing 12-month net income would be $155.8-million (U.S.) for the year ended April 3.
The company said it expects consolidated revenue of $426-million and operating income of $37-million in the second quarter.
Cott employs 2,800 people and has bottling plants in the United States, Canada, Britain and Mexico. Its non-alcoholic beverage concentrates are sold in more than 50 countries and it is one of the world's largest pop producers, ranking third behind Coke and Pepsi.