Cott's UK business unit announces acquisition of UK-based Aimia Foods; purchase price includes payment of approximately US$80M at closing, US$33M in deferred consideration
TORONTO and TAMPA, Florida
May 30, 2014
– Cott Corporation (NYSE: COT) (TSX: BCB) today announced that its United Kingdom / Europe ("U.K.") Business Unit has acquired all subsidiary companies of Aimia Foods (Holdings) Limited. Aimia Foods is a privately owned business based in Merseyside, United Kingdom with revenues of approximately USD$110 million for the twelve months ending March 31, 2014.
The purchase price includes the payment of approximately USD$80 million at closing plus an adjustment for working capital, USD$33 million in deferred consideration payable in September 2014, and on-target earnout consideration of USD $20 million, with a minimum earnout consideration of USD $13 million and a maximum earnout consideration of USD$27 million. The purchase price will be funded through cash on hand and borrowings under Cott's asset based lending facility.
Steve Corby, Managing Director of the U.K. Business Unit, commented: "The Aimia Foods acquisition accelerates our diversification strategy, bringing a strong hot and cold beverage platform and multiple foodservice relationships into our portfolio. Aimia has extensive expertise in new product categories, packaging formats and trade channels, such as the packaging of powdered beverages, which we believe enhances the diversification opportunities available to the combined businesses. Aimia's core strengths lie in the manufacturing, sale and marketing of Aimia-owned and third party licensed beverage brands across all sectors of the U.K. market, including Foodservice, Vending, Cash & Carry and Retail. Aimia has been highly successful in maintaining strong relationships with leading brand-owners and outsourcing partners, and we look forward to continuing to build these relationships under Aimia's current leadership team."
Rob Unsworth, Managing Director of Aimia Foods, said: "We firmly believe that bringing Aimia Foods 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 keep building on the strong foundation already established."
Compelling Strategic Rationale
The transaction is intended to accelerate in both pace and scale Cott's acquisition based diversification outside of carbonated soft drinks and shelf stable juices, with a focus on other beverage categories and beverage adjacencies, as well as on driving our channel mix beyond large format retail and supermarket stores.
Enhances Product Diversification. Aimia provides access to growing higher value categories, with approximately 85% of Aimia's revenues attributable to categories new to Cott, including hot chocolate, coffee, malt drinks, creamers/whiteners and cereals.
Improves Channel Diversification. Aimia has a strong presence outside large format retail and supermarket stores, with approximately 40% of revenues in the wholesale, vending and foodservice channels and 35% of revenues from contract manufacturing.
Expands Packaging Capabilities. Aimia provides new packaging formats, including pouches, jars, sticks, in-cup products, sachets and block-bottom bags.
Enhances Operational Platform. The transaction brings together two best-in-class operators with a shared low-cost operational approach and scalable infrastructure, creating a stable platform for future expansion opportunities.
The combination is expected to be accretive to both earnings and free cash flow in the first year. Cott also expects to realize incremental revenue growth opportunities based on its expanded product portfolio and broader channel diversification. The year 2 post synergy adjusted EBITDA multiple is expected to be in the 5x to 6x range and the cash on cash IRR in the mid to high teens.
Safe Harbor Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management's expectations as to the future based on plans, estimates and projections at the time Cott makes the statements. Forward-looking statements involve inherent risks and uncertainties and Cott cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include, but are not limited to, statements relating to Cott's acquisition of Aimia Foods, the performance of the combined business in the future, the impact of the acquisition on Cott's operating results and financial position, and Cott's strategies for growth. The forward-looking statements are based on assumptions regarding management's current plans and estimates. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate. Factors that could cause actual results to differ materially from those described in this press release include, among others: (1) Cott's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of Cott; (2) the ability to integrate Aimia Foods into Cott with no substantial adverse effect on the acquired entity's or Cott's operations, employee relationships, retailer relationships, supplier relationships, customer relationships or financial performance; and (3) expected synergies and cost savings are not achieved or achieved at a slower pace than expected; (4) in connection with the acquisition of Aimia Foods, Cott has borrowed significant amounts and will have to use a significant portion of its cash flows to service such indebtedness, as a result of which Cott might not have sufficient funds to operate its businesses in the manner it intends or has operated in the past; and (5) other risks and uncertainties indicated from time to time in Cott's filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Cott's Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other periodic reports filed with the securities commissions. Cott does not undertake to update or revise any of these statements in light of new information or future events, except as expressly required by applicable law.