Primo Water has entered into a definitive agreement with Culligan International which will acquire a significant portion of Primo’s international businesses in a $575 million cash transaction.

Primo, a provider of sustainable drinking water solutions in North America and Europe, said it will follow a more simplified operation with a greater focus on its North American water business following the transaction. The transaction excludes the Aimia Foods, United Kingdom, Portugal, and Israel businesses, but each of these will be sold across 2024.

Primo will also accelerate the achievement of several previously announced 2024 targets, including improvements in adjusted gross margins, and earnings before tax adjustments.

The company also claims that the transaction will allow it the financial flexibility to pursue organic growth and engage in “strategic opportunities complementary and adjacent to its core North American water business”.

The deal would also allow the company to retain 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.

Tom Harrington, CEO of Primo Water, said: “We are pleased to have reached an agreement that we believe unlocks significant value for Primo Water shareowners. The transaction 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.”

The transaction is expected to close by the end of December 2023, subject to the receipt of regulatory approvals and the satisfaction of other customary closing conditions. The closing transaction is not subject to any financing conditions.