ROTTERDAM, Netherlands,
July 25, 2017 /PRNewswire/ --
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)[1]
-
- 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
Refresco (Euronext Amsterdam: RFRG), 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 (NYSE: COT, TSX:
BCB). 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[2]), 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.
CEO Refresco, Hans
Roelofs: "This transaction marks a step change in the
industry that reinforces Refresco's position as a leading
independent bottler for retailers and A-brands. Last year in
September we acquired Whitlock Packaging, marking our entrance into
the North American market and the start of our second platform for
growth. This is a truly transformational deal, right at the heart
of our buy & build strategy. Being able to acquire Cott's
bottling activities is an opportunity we have been studying for the
last decade, and today, having grown the company through many
successful acquisitions, we have the size, track record and
execution power to take this significant leap forward.
"The bottling activities of Cott are a perfect strategic fit to
our current activities. With the acquisition we create nationwide
coverage in the US, the largest single soft drinks market globally,
while adding significant capacity and extending our broad product
portfolio in the UK. A total of 29 production sites, producing a
volume of over 4 billion liters of products, will be added to our
already extensive manufacturing footprint and upon completion,
Refresco will produce approximately 12 billion liters for all
leading retailers and A-brands.
"Combining these two great companies we add high quality
management, employees and assets to the Group and we create a new
industry leader with continued potential for further value
creation. I am excited about the future ahead."
Jerry Fowden, Cott's CEO:
"This transaction provides a unique opportunity for Cott Beverages
to become an integral part of a larger beverage manufacturing
company creating a business that will have a broader portfolio of
products as well as expanded facility capabilities and geographic
presence which will create new and exciting opportunities for its
employees and customers alike. With the sale of this business we
will continue to focus on growing our water, coffee, tea and
filtration services businesses."
Strategic rationale: creating the world's largest independent
bottler for retailers and A-brands
Refresco acquires the bottling activities of Cott, bundled in
the 'Traditional Business' division (TB). Excluded from the
acquisition are Cott's branded activities (RCI and its associated
concentrate facility (US) and the Aimia Foods division (UK)).The
acquired activities comprise a USD 1.7
billion revenue, USD 136.5
million adjusted EBITDA business. It has a resilient
financial performance with strong and stable cash flow generation
and a focus on higher margin businesses. The acquisition comprises
all the hot fill and cold fill activities, across all categories:
carbonated soft drinks, juices and juice drinks, sparkling waters,
mixers and others.
Cott's TB is a leading bottler of retailer brands and has a
rapidly growing contract manufacturing business, representing 86%
and 14% of volumes respectively. Cott has strong customer
relationships and serves over 500 leading retailers and a growing
number of A-brands.
Cott has a fully-integrated and well-established manufacturing
footprint with strong R&D capabilities. It offers its customers
highly recognized services and operates a high service, low-cost
production model. With this acquisition, Refresco's activities in
North America will be
significantly extended, resulting in national coverage with 22
manufacturing sites in the US, 4 manufacturing sites in
Canada and 1 manufacturing site in
Mexico. Furthermore, Refresco will
have 26 manufacturing sites in continental Europe and 6 manufacturing sites in the UK. A
combination of Refresco and the Cott bottling activities enables
Refresco to provide retailers and A-brands with enlarged reliable
supply chain solutions in Europe
and North America.
The Cott bottling activities add new capabilities and expertise
as well as the potential to share best practices across the
combined activities of Refresco. There is significant synergy
potential through scale benefits in raw material and packaging
procurement, the realization of opex and capex efficiencies in
footprint, utilization and logistical optimization, as well as
benefits from integration and streamlining of the combined
organization. As a result of the combination, Refresco anticipates
total synergies of EUR 47 million,
which are expected to be realized over a three year period.
Financing fully underwritten, Refresco expects a share issue
of approximately EUR 200
million
The acquisition financing structure should provide for financial
strength and flexibility of the enlarged group after the
transaction. Refresco intends to finance the acquisition with debt.
To this end, and to refinance existing debts, Refresco has entered
into binding facility agreements with its banks.
Upon completion, the leverage ratio is expected to increase to
approximately 4.5 times adjusted EBITDA. The strong cash flow
generation of the combined business, as well as Refresco's track
record of disciplined deleveraging, enables the company to bring
the leverage ratio down to around 3.5 within 2 years' time.
Within 12 months of closing, Refresco intends to issue new
ordinary shares to raise around EUR 200
million to further support the financial strength of
Refresco and its capabilities to continue the buy and build
strategy. At the AGM held in May of this year, Refresco received
authorization from its shareholders to issue shares and/or grant
rights to subscribe for shares, up to (i) a maximum of 10% of the
total number of shares outstanding, and (ii) an additional maximum
of 10% of the total number of issued shares outstanding in the
event of or in connection with mergers, acquisitions and/or
strategic alliances. The total share issue will stay within the
authorization of 20% of the issued shares outstanding as received
from the shareholders.
Conditions and next steps
The definitive terms and conditions of the transaction have been
fully negotiated. Completion of the transaction is subject to
customary closing conditions such as regulatory approvals,
Refresco's shareholder approval and the absence of material adverse
changes. Refresco does not anticipate any significant antitrust
issues and will start the process to obtain approval from the UK
competition authority (CMA) and the relevant competition
authorities in both the US and Canada. Refresco will seek to get competition
clearance as soon as is practicable. If the agreement is terminated
due to failure to obtain shareholder approval for the required
resolution, Refresco will owe Cott a termination fee of 1.6% and an
additional 1% in the event of a change of ownership.
The transaction will be put before Refresco's shareholders
during an Extraordinary General Meeting of Shareholders (EGM), to
be held on September 5, 2017. The EGM
has been convened in the usual manner today. The agenda, as well as
a shareholder circular with more information on the transaction, is
available on the corporate website.
The transaction is anticipated to be completed in the second
half of 2017, provided the resolution has been adopted and the
other conditions have been satisfied. Integration into one
corporate structure per geography will be initiated following the
completion of the transaction.
Transaction advisors
In connection with the transaction, J.P. Morgan Securities plc.
has acted as Refresco's M&A advisors, KPMG as its financial and
tax advisors and Nixon Peabody LLP and Allen & Overy LLP as its
legal counsels.
Media call
Refresco will host a media call today, July 25, 2017, at 09:00am
CET, which can be accessed as follows:
Netherlands: +31 (0)20 703
8261
UK: +44 (0)330 336 9412
USA: +1 719 457 1036
Conference ID: 7772662
Analyst call & webcast
Refresco will host an analyst call today, July 25, 2017, at 10:00am
CET, which can be accessed as follows:
Netherlands: +31 (0)20 721
9251
UK: +44 (0)330 336 9105
USA: +1 719 457 2086
Conference ID: 7161678
The analyst call will be a live audio webcast. You can access
the webcast and presentation via
https://www.refresco.com/investors/investor-centre/. A replay of
the call will be available by the end of the day.
Financial calendar 2017
Publication of Q2 and
HY 2017 results
|
August 10,
2017
|
Publication of Q3
2017 results
|
November 9,
2017
|
About Refresco
Refresco (Euronext: RFRG) is the leading independent bottler of
soft drinks and fruit juices for retailers and A-brands with
production in the Benelux, Finland, France, Germany, Italy, Poland, Spain, the UK and the US. The company realized
in 2016 full year volumes and revenue of circa 6.5 billion liters
and circa €2.1 billion, respectively. Refresco offers an extensive
range of product and packaging combinations from 100% fruit juices
to carbonated soft drinks and mineral waters in carton, PET,
Aseptic PET, cans and glass. Focused on innovation, Refresco
continuously searches for new and alternative ways to improve the
quality of its products and packaging combinations in line with
consumer and customer demand, environmental responsibilities and
market demand. Refresco is headquartered in Rotterdam, the Netherlands and has about 5,500
employees.
About Cott
Cott is a diversified beverage company with a leading
volume-based national presence in the North America and European home and office
bottled water delivery industry, a leader in custom coffee roasting
and blending of iced tea for the U.S. foodservice industry, and one
of the world's largest producers of beverages on behalf of
retailers, brand owners, and distributors. Our platform reaches
over 2.3 million customers or delivery points across North America and Europe supported by strategically located
sales and distribution facilities and fleets, as well as
wholesalers and distributors. This enables us to efficiently
service residences, businesses, restaurant chains, hotels and
motels, small and large retailers, and healthcare facilities. The
TB division comprises Cott's bottling activities, focused on
production of beverages on behalf of retailers and brand owners,
and represents approximately 47% of Cott's net revenues. With 29
production sites, the bottling activities produce a volume of over
4 billion liters per year.
Notes to the press release
This is a public announcement by Refresco N.V. pursuant to
section 17 paragraph 1 of the European Market Abuse Regulation
(596/2014). This public announcement does not constitute an offer,
or any solicitation of any offer, to buy or subscribe for any
securities in Refresco Group N.V.
This press release is not intended to and does not constitute
an offer to sell or the solicitation of an offer to subscribe for
or buy or an invitation to purchase or subscribe for any securities
or the solicitation of any vote or approval in any jurisdiction in
connection with the proposed transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. Refresco
Shareholders are advised to read the shareholders circular
published by Refresco today. This communication is not for release,
publication or distribution, in whole or in part, in or into,
directly or indirectly, any jurisdiction in which such release,
publication or distribution would be unlawful.
[1] At USD/EUR rate of 1.14. Subject to final adjustments at
closing.
[2] At USD/EUR rate of 1.14. Subject to final adjustments at
closing.
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SOURCE Refresco