Primo Water Announces Closing of the Sale of Signifigant Portion of Its International Business
- Completion of the sale of a significant portion of International businesses for $575 million
- Focus on core North American water business
- Improved financial profile and achievement of 2024 targets
- Appointment of Robbert Rietbroek as the new CEO and Board member
- None.
Insights
The sale of Primo Water Corporation's international businesses for $575 million is a strategic move that reflects a shift in the company's focus to its North American operations. This transaction is significant as it provides the company with a substantial influx of cash, which can be leveraged to strengthen its balance sheet. By repaying the outstanding balance on its cash flow revolver, Primo Water demonstrates a commitment to reducing its leverage, which can be positively perceived by investors concerned with financial stability.
Furthermore, the increase in share repurchase authorization from $50 million to $75 million signals a proactive approach to shareholder value enhancement. Share repurchases can potentially increase earnings per share and return excess capital to shareholders, which might be attractive to investors seeking capital appreciation and income. The company's emphasis on pure-play operations could lead to more efficient capital allocation and operational excellence within its core market.
Primo Water's decision to divest its international segments and focus on the North American market underscores the company's strategic intent to capitalize on its strong position in a region where it already enjoys scale. This move may allow Primo Water to better align its resources and managerial efforts on market segments where it has competitive advantages, potentially leading to increased market share and customer loyalty.
The company's diversified business mix, including various water channels and a balance of residential and commercial customers, positions it to mitigate risks associated with market fluctuations. By pursuing organic growth and accretive tuck-in acquisitions, Primo Water aims to deepen its market penetration and expand its product offerings, which could lead to sustainable growth in the long term.
The appointment of Robbert Rietbroek as CEO and his addition to the Board of Directors introduces new leadership dynamics at Primo Water. Leadership transitions can have significant impacts on corporate strategy and investor confidence. The inducement equity award granted to Mr. Rietbroek aligns his interests with those of shareholders, as the vesting of RSUs is contingent upon his continued service. This structure is intended to incentivize long-term value creation and stability within the executive team.
It is essential to monitor how the new CEO's strategic vision and leadership style will influence Primo Water's performance. Effective leadership is crucial for executing the company's strategic focus on its North American operations and achieving the targeted financial metrics, such as improved adjusted gross margins and EBITDA margins, as well as free cash flow conversion.
Robbert Rietbroek Commences as Chief Executive Officer and Joins the Board Of Directors
"The completion of this transformative transaction simplifies and focuses Primo Water on our core pure-play North American water business. Our greater focus also comes with the enhanced financial flexibility to pursue organic growth, reduce leverage, return capital via share repurchases and dividends, accelerate accretive tuck-in acquisitions and engage in opportunities complementary and adjacent to our core North American water business," said David Hass, Chief Financial Officer, Primo Water. "I am pleased to confirm that as part of our renewed commitment to lower net adjusted leverage and to return capital to shareowners, we will repay the outstanding balance on our cash flow revolver and the board of directors increased our
The simplified, proforma Primo Water will have:
- Greater focus on its pure-play North American water business where it enjoys national and local scale and is one of the leading players.
- An improved financial profile, accelerating the achievement of several previously announced 2024 targets, including improvements in adjusted gross margins and adjusted EBITDA margins, as well as adjusted free cash flow conversion.
- The financial flexibility to pursue organic growth, reduce leverage by repaying the cash flow revolver, return capital via share repurchases and dividends, accelerate accretive tuck-in acquisitions and engage in opportunities complementary and adjacent to its core North American water business.
- A diversified business mix across key water channels including Water Dispensers, Water Direct, Water Exchange, Water Refill, and Water Filtration, as well as a balanced mix of residential and commercial customers.
BMO Capital Markets Corp. acted as exclusive financial advisor and White & Case LLP served as legal advisors to Primo Water in the Transaction.
Primo Water also announced today that Robbert Rietbroek joined Primo Water as its Chief Executive Officer ("CEO") on January 1, 2024. Mr. Rietbroek was also appointed to serve as a director on Primo Water's Board of Directors.
In connection with the commencement of Robbert Rietbroek's service, the Company issued its previously announced inducement equity award to Mr. Rietbroek. The award was made pursuant to the Company's previously disclosed offer letter agreement with Mr. Rietbroek, and as a material inducement to his joining Primo Water as CEO and a member of the Board.
The inducement award is comprised of 232,558 restricted share units ("RSUs") and is being made outside Primo Water's existing equity incentive plans, but subject to the same terms and conditions as if granted under the Primo Water Corporation 2018 Equity Incentive Plan, as amended. Each RSU will entitle Mr. Rietbroek to receive one Primo Water common share for each RSU that vests. The RSUs will vest in equal installments on each of the first two anniversaries of the grant date, subject to Mr. Rietbroek's continuous service through the applicable vesting dates. The RSUs were approved by the Board of Directors in reliance on the employment inducement exemption under the NYSE's Listed Company Manual Rule 303A.08, which requires public announcement of the number of RSUs comprising the inducement award.
Primo Water is a leading
Primo Water's water solutions expand consumer access to purified, spring, and mineral water to promote a healthier, more sustainable lifestyle while simultaneously reducing plastic waste and pollution. Primo Water is committed to its water stewardship standards and is proud to partner with the International Bottled Water Association (IBWA) in
Primo Water is headquartered in
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management's expectations as to the future based on plans, estimates and projections at the time Primo Water makes the statements. Forward-looking statements involve inherent risks and uncertainties and Primo Water cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. You can identify forward-looking statements by words such as "may," "will," "would," "should," "could," "expect," "aim," "anticipate," "believe," "estimate," "intend," "plan," "predict," "project," "seek," "potential," "opportunities," and other similar expressions and the negatives of such expressions. However, not all forward-looking statements contain these words. The forward-looking statements contained in this press release include, but are not limited to, statements related to the use of proceeds in the Transaction, the potential impact the Transaction will have on Primo Water and related matters, and the execution of our strategic priorities. The forward-looking statements are based on assumptions regarding management's current plans and estimates. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate.
Factors that could cause actual results to differ materially from those described in this press release include, among others: risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; the risk that disruptions from the transaction will harm Primo Water's business; and the effect of economic, competitive, legal, governmental and technological factors on Primo Water's business.
The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Primo Water's Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other filings with the securities commissions. Primo Water does not undertake to update or revise any of these statements in light of new information or future events, except as expressly required by applicable law.
View original content to download multimedia:https://www.prnewswire.com/news-releases/primo-water-announces-closing-of-the-sale-of-signifigant-portion-of-its-international-business-302024207.html
SOURCE Primo Water Corporation
FAQ
What businesses did Primo Water sell in the recent transaction?
What are the company's key areas of focus after the transaction?
Who is the new CEO of Primo Water?
What is the inducement equity award received by Robbert Rietbroek?
