ATLANTA – DS Services Holdings, Inc. (“DS Services”), a leading national direct-to-consumer provider of bottled water, office coffee and water filtration services, has announced that its sole stockholder and parent company, DSS Group, Inc. (“DSS”) has entered into a definitive merger agreement to be acquired by Cott Corporation for approximately $1.25 billion. The agreement includes the assumption of debt and the issuance of preferred shares to Crestview Partners and other selling shareholders.
The acquisition will extend Cott’s beverage portfolio into new and growing markets, including water and coffee home and office delivery services, water filtration services, and retail services, while creating cost synergies as well as portfolio expansion. In addition, the acquisition is expected to broaden the distribution platform of Cott by adding a national direct-to-consumer distribution channel with the 2,100 customer routes operated by DSS.
Transaction Conference Call
Cott Corporation will host a conference call today, November 6, 2014, at 8:30 a.m. EST, to discuss the acquisition, which can be accessed as follows:
North America: (877) 407-8031
International: (201) 689-8031
A copy of the slide presentation that will be used on the call will be available through Cott’s website at http://www.cott.com/en/for-investors/events-and-presentations. 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.
Compelling Strategic Rationale
The acquisition of DSS will accelerate Cott’s acquisition based diversification outside of carbonated soft drinks and shelf stable juices, and is in line with Cott’s strategy of focusing on higher margin growth oriented businesses in beverage and beverage adjacencies. The acquisition gives Cott a complementary beverage platform for growth while diversifying Cott’s channel mix beyond large format retail and supermarket stores.
The acquisition is expected to:
- Improve top-line growth
- Enhance overall gross profit and EBITDA margins
- Provide significant diversification across product categories, packaging formats and raw material purchases
- Offer a new direct route to market that will improve channel mix beyond large format retail and supermarket stores
- Reduce customer concentration
- Provide cost and revenue synergies of approximately $25 million per year by the end of 2017
Jerry Fowden, Cott’s Chief Executive Officer commented, “Tom Harrington and his talented management team have done a great job building DSS. We are delighted that they will continue to lead the company going forward as we work together to drive future growth.”
Tom Harrington, CEO and President of DSS noted, “We firmly believe that bringing DSS into the Cott family will provide additional opportunities for the benefit of our employees and customers alike. Our leadership team is excited to work with Cott to drive growth, while creating cost synergies as well as portfolio expansion. On a final note, we want to thank Crestview Partners. They have been very supportive partners to DS and to me personally.”
Jeff Marcus, DSS’s Chairman and a Partner at Crestview, commented, “We have the highest regard for Tom and his team and have greatly enjoyed our partnership. We believe this transaction will enable DSS to accelerate its growth initiatives and will firmly establish Cott as a leader in the beverage space.” Mr. Marcus will serve on Cott’s Board of Directors as an observer.
Upon completion of the acquisition, DSS will operate as a subsidiary of Cott, based in Atlanta, Georgia. DSS will continue to be led by Tom Harrington, DSS’s current CEO and President, as well as the company’s present leadership team. The acquisition is expected to close by the end of January 2015.
Barclays acted as financial advisor to DSS on the transaction. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor.
Credit Suisse acted as financial advisor to Cott on the DSS transaction. Drinker Biddle & Reath LLP acted as legal advisor.
