Cott Buys Cliffstar for $500 Million

Beverage company Cott Corp. has signed an agreement to acquire the privately-held Cliffstar Corp., which a private-label juice company, for $500 million.

Cott said the purchase strengthens its position in private-label beverages. It said in a media release that the acquisition expands its product portfolio and manufacturing capabilities, "enhances our customer offering and growth prospects and improves our strategic platform for the future."

In addition to the $500 million due at signing, Cott said Cliffstar is entitled to $14 million of deferred consideration, which will be paid over a three-year period. Cliffstar is also entitled to additional contingent consideration of up to $55 million, based upon the achievement of certain performance measures and the completion of certain expansion projects in 2010.

Cott said the purchase price is subject to adjustments for working capital and other items and it expects to receive a tax benefit from the acquisition of about $75 million.

Founded in 1970, Cliffstar, which is based in Dunkirk, N.Y., supplies private-label beverages. Cott said it had revenue of $654 million in the last 12 months.

Cott said the purchase price is expected to be funded by a combination of new debt of up to $375 million, new common equity issuance of up to $95 million, and incremental borrowings under Cott's asset-based lending facility of $75 million

Cott said it expects second-quarter revenue to be $426 million, on a stand-alone basis.

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