Cott Corp. (COT) to Acquire Eden Springs in EUR 470M Deal

Cott Corporation (NYSE: COT) announced that it has entered into a definitive share purchase agreement to acquire Eden Springs ("Eden"), a leading European direct-to-consumer services provider. Eden is held by investment funds affiliated with Rhône Capital and specializes in home and office delivery ("HOD") water, office coffee services ("OCS") and filtration. The purchase price is approximately EUR 470 million, on a debt and cash free basis, representing a mid 7x Eden's estimated adjusted 2016 run rate EBITDA of over EUR 60 million (mid 6x multiple including estimated run-rate synergies of approximately EUR 10 million).

The acquisition is consistent with Cott's stated diversification strategy to expand in HOD water, coffee and tea services as well as filtration services where its platform, operating strength and potential synergies can be leveraged. Eden is a scale business that generated over EUR 360 million in pro forma revenues during 2015. The acquisition broadens the distribution platform of Cott's existing UK/European business by providing access to a direct-to-consumer route distribution platform in Europe serving over 800,000 homes and offices. In line with Cott's strategy, the acquisition is expected to be accretive to adjusted free cash flows in its first full year and provide a cash on cash IRR above its cost of equity.

COMPELLING STRATEGIC RATIONALE

The acquisition of Eden is in line with Cott's strategy of focusing on acquiring cash accretive businesses with higher margin and/or growth in beverage and beverage adjacencies while continuing Cott's diversification outside of carbonated soft drinks, shelf stable juices and large format retail. The acquisition is expected to:

• Provide market-leading positions and strong platforms in multiple new geographies;
• Be a platform onto which highly accretive tuck-in acquisitions can be completed;
• Improve Cott's channel mix outside of large format retail and supermarket stores;
• Continue Cott's shift to higher margin categories;
• Offer cross selling and vertical integration opportunities to leverage DS Services' and Cott's products;
• Reduce customer concentration; and
• Provide procurement cost and other synergies over a three year period.

"The Eden Springs acquisition is another great step in our stated strategy to pursue opportunities in the higher margin home and office water delivery, office coffee and tea services and filtration categories where we believe our platform, operating strength and synergies can be leveraged," commented Jerry Fowden, Cott's Chief Executive Officer. "Our Better for You beverage platform will make up over 60%(1) of our EBITDA inclusive of Eden and we will have strong leadership positions in both North America as well as multiple European countries," continued Mr. Fowden.

(1) Better For You beverage categories defined as HOD Water, Sparkling Waters, OCS and Water.

FINANCIAL HIGHLIGHTS

The combination is expected to be accretive to adjusted free cash flow (excluding acquisition, integration and transaction costs) in the first full year and accretive to free cash flow in the second full year. Evercore acted as financial advisor to Cott along with Deutsche Bank Securities Inc., JP Morgan and Wells Fargo who also provided unsecured committed financing. Cott ultimately intends to finance the transaction through a combination of incremental borrowings under its ABL facility and a new debt issuance of unsecured notes.

Tom Harrington, CEO of DS Services, commented, "We are very excited about expanding our platform into the European market. We firmly believe that our combined partnerships and home and office water and coffee delivery expertise will create an even stronger, cash generating, growth and service oriented platform across North America and Europe. In addition, these platforms not only provide the opportunities for organic growth but we expect to be able to capitalize on Eden's and DS Services' combined expertise in tuck-in acquisitions to pursue further opportunities in the fragmented home and office bottled water, office coffee service and filtration markets across Europe."

Raanan Zilberman, Eden's CEO, commented, "Eden is a successful business and a natural fit with the wider Cott family. This transaction is an important step as we strengthen our international capability and develop our market-leading position. We plan to extend the opportunities from commercial and operational synergies of the enlarged group to our over 800,000 customers and 3,200 employees in Europe. This transaction ends our successful partnership with Rhône Capital, who I would like to thank for their support during Eden's expansion over the past few years."

The acquisition, which is expected to close in the third quarter of 2016, is subject to certain customary closing conditions (including regulatory approvals) and purchase price adjustments. Additional financial information and a modeling call will be presented post-closing.

TRANSACTION CONFERENCE CALL

Cott Corporation will host a conference call today, June 7, 2016, at 8:30 a.m. ET, to discuss the acquisition, which can be accessed as follows:

North America: (888) 211-7360 International: (913) 312-0665

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.

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