Primo Brands (PRMB) M&A Announcement summary

Deal rationale and strategic fit

• The merger creates a leading North American pure-play healthy hydration company with a diversified portfolio, national footprint, and enhanced distribution capabilities, combining complementary strengths and iconic brands.

• The combined entity addresses growing consumer demand for health and wellness beverages, with a focus on sustainability, stewardship, and community engagement.

• The deal enables innovation and expansion into new channels, geographies, and product segments, positioning for sustained long-term growth.

• The merger is structured as an all-stock, merger-of-equals transaction, with a new U.S. holding company to be named at closing.

• The new entity will leverage a portfolio of two $1 billion brands and several premium regional brands to compete more effectively in a fragmented, high-growth category.

Financial terms and conditions

• All-stock merger of equals; Primo Water shareholders and incentive equity holders to own 43% and BlueTriton shareholders 57% of the combined entity.

• Primo Water shareholders to receive a pre-closing special dividend of up to $0.82/share (totaling up to $133 million).

• Combined LTM revenue as of March 31, 2024, is $6.5 billion, with adjusted EBITDA of $1.5 billion, including $200 million in estimated run-rate cost synergies.

• Net leverage is expected to be about 3x at closing, with a medium-term target of 2x–2.5x.

• The combined company will maintain both headquarters, be listed on the NYSE, and continue Primo Water’s $0.36/share annual dividend, with long-term policy to be determined post-closing.

Synergies and expected cost savings

• Targeting $200 million in run-rate cost synergies within three years post-closing, with most realized by the end of year two.

• One-time costs to achieve synergies are estimated at $115 million.

• Synergies will come from operations, procurement, IT, call centers, and SG&A, with a focus on optimizing manufacturing, distribution, and leveraging route density.

• Additional value creation is expected from business optimization initiatives and leveraging best practices across the combined platform.

• Combined adjusted free cash flow for the twelve months ended March 31, 2024, was over $565 million.