Primo Water Corporation, a leading provider of sustainable drinking water solutions in North America and Europe, announced it has entered into a definitive agreement whereby Culligan International will acquire a significant portion of Primo Water's International businesses in an all-cash transaction valued at up to $575 million. The transaction excludes the Aimia Foods, United Kingdom, Portugal, and Israel businesses but each of these will be sold across 2024.
Tom Harrington, chief executive officer, Primo Water said in the announcement: "We are pleased to have reached an agreement that we believe unlocks significant value for Primo Water shareowners. The Transaction was the result of a proactive board-led process that resulted in an agreement that offers an attractive premium valuation for a significant portion of our international businesses and simplifies and focuses Primo Water on our core North American water business. Looking ahead, we will be laser-focused on growing the North American business, increasing our profitability and margins, enhancing our balance sheet strength, and returning capital to shareowners."
According to the announcement, the simplified, proforma Primo Water will have:
- Greater focus on its pure-play North American water business where it enjoys national and local scale and is one of the leading players.
- An improved financial profile, accelerating the achievement of several previously announced 2024 targets, including improvements in adjusted gross margins, adjusted EBITDA and adjusted EBITDA margins, as well as adjusted free cash flow conversion.
- The financial flexibility to pursue organic growth, reduce leverage, return capital, accelerate accretive tuck-in acquisitions and engage in strategic opportunities complementary and adjacent to its core North American water business.
- A diversified business mix across water dispensers, water direct, water exchange, water refill, and water filtration, as well as a balanced mix of residential and commercial customers.