Primo Water Corporation and a BlueTriton Brands affiliate have agreed to merge in an all-stock deal approved unanimously by both boards to create "a leading North American healthy hydration company".

The merger is anticipated to generate about $200 million in cost savings, which is expected to be achieved within three years after the transaction closes.

Upon closing of the transaction, Primo Water shareholders and incentive equity holders will own 43% of the fully diluted shares of the combined company – called NewCo – while BlueTriton shareholders will own 57%.

The merger will combine Primo Water and BlueTriton's strengths to establish a North American company specialising in healthy hydration, offering diverse products across various formats, channels and consumer needs.

According to Primo Water, NewCo will have a strong financial presence, with combined net revenue and adjusted EBITDA of $6.5 billion and $1.5 billion, including anticipated cost savings of $200 million, for the twelve months ending 31 March 2024. One-time costs related to achieving these savings are estimated at around $115 million.

The combined company will offer a broad range of well-known brands across various product formats, distribution channels, price ranges and consumer needs. It will feature a strong portfolio in healthy hydration, supported by a sustainable delivery system that reaches millions of customers. Technology will be used to improve customer service, optimise delivery routes and further reduce carbon emissions.

In the twelve months ending 31 March 2024, the combined company generated more than $565 million in Adjusted Free Cash Flow. Moving forward, it aims to keep normalised capital expenditures at around 4% to 5% of its net revenue.

Robbert Rietbroek, CEO of Primo Water, said: "We are excited to combine Primo Water with BlueTriton to create a leading North American pure-play healthy hydration company. The transaction is expected to deliver significant value to our shareholders along with the opportunity to participate in the long-term upside potential of the combined company, which will build upon and complement our existing healthy hydration platform."

Rietbroek continued: "The combined company will benefit from a diversified portfolio of iconic brands, a national footprint and the strength of the combined delivery platform to better serve customers anywhere and any way they hydrate. Under the stewardship of One Rock and Metropoulos & Co, BlueTriton delivered net revenue growth and increased profitability for both its retail brands and ReadyRefresh."

Joey Bergstein, CEO of BlueTriton, added: "The combination of BlueTriton and Primo Water enables our iconic, trusted brands, many with over 100 years of rich heritage, to further expand distribution and reach a broader base of customers with healthy hydration solutions. With greater presence, we also believe that we will have greater ability to positively impact our communities, invest in water stewardship, and bring circular packaging and refillable options to more people in more places."

The transaction allows NewCo to retain the bonds and term loans of both Primo Water and BlueTriton, if the parties desire to do so.

NewCo plans to continue Primo Water's current annual dividend of $0.36 per share. The future dividend policy of the combined company will be decided and announced after the transaction is completed. Financial terms of the deal were not disclosed.

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