Shares of Primo Water (PRMW), a provider of multi-gallon purified bottled water and self-service refill water, rose over 14% to touch a fresh five-year high of $13.67 on Monday after the company said that it executed a merger agreement with Glacier Water Services,a provider of drinking water dispensed through self-service refill water machines, in which Primo will acquire all outstanding shares of Glacier.
The total preliminary transaction consideration is about $263 million, consisting of approximately $50 million in cash, about $36 million in Primo common stock, approximately $177 million of net indebtedness and preferred stock being assumed or retired, and five-year warrants to purchase 2.0 million shares of Primo’s common stock at an exercise price of $11.88 per share, subject to adjustments based on any increases in Glacier’s debt and certain transaction expenses.
Following the acquisition, Primo will have about 46,000 retail locations throughout the U.S. and Canada, according to a joint statement. The transaction is intended to generate significant operating scale through an expansive refill and exchange network.
Additionally, the acquisition will drive future cross-selling opportunities, significant cost savings, and consistent cash flows, the statement added. On a pro forma trailing twelve months that ended June 30, the acquisition creates a combined company with approximately $272.6 million in net sales, $14.3 million in income from operations and $45.4 million in adjusted EBITDA.
PRMW trades in a new 52-week range of $7.39 to $13.67.
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