Florida-headquartered Primo Water Corporation (PRMW), a provider of sustainable drinking water solutions in North America and Europe on Thursday announced that it has entered into a definitive agreement whereby Culligan International would acquire a significant portion of Primo Water’s International businesses in an all-cash transaction valued at up to $575 million.
The deal has a premium valuation multiple of approximately 11 times adjusted EBITDA based on trailing twelve months ended July 1, 2023.
Upon closing the Transaction, Primo Water intends to repay the outstanding balance on its cash flow revolver, with a long-term goal of sustaining adjusted net leverage under 2.5 times Adjusted EBITDA.
Also, upon closing, an incremental $25 million share repurchase would be authorized, revising the share repurchase authorization to $75 million.
The company cites the agreement as the first step in exiting all of its international businesses. The deal enables focus on North America market where Primo Water has leadership, scale and a significant addressable customer opportunity.
Proceeds from the transaction would be used to drive organic growth, reduce leverage, accelerate Water Direct tuck-in M&A, pursue water adjacencies and return capital to shareowners via share repurchases.
The transaction is expected to close by December 31, 2023.
BMO Capital Markets Corp. is acting as exclusive financial advisor and White & Case LLP is serving as legal advisors to Primo Water.
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