Canada's Cott Corp. To Buy Juice Maker Cliffstar

NEW YORK (AP) -- Canadian soft drink maker Cott Corp. is buying private-label juice maker Cliffstar Corp. for $500 million in cash, to expand its portfolio of beverages.

Cliffstar is the largest private-label maker of apple juice, grape juice, cranberry juice and juice-blends in North America. The company has about $654 million in 12-month revenue and operates 11 facilities in the U.S. with about 1,200 total employees.

Cott CEO Jerry Fowden said the deal strengthens Cott's position in private-label beverages. Cott, which makes discount sodas, has benefited from price-conscious shoppers who are trading down to less-expensive products.

The company said late Wednesday that Cliffstar, based in Dunkirk, New York, will be eligible for additional payouts of up to $55 million, depending on its performance through Jan. 1, 2011 and the completion of certain expansion projects this year. Cliffstar also could receive $14 million in deferred consideration over a three-year period.

Cott plans to pay for the deal by issuing up to $375 million in new debt and up to $95 million in new stock, as well as borrowing from its $75 million asset-based lending facility.

The deal is expected to close in the third quarter and add to earnings on a cash basis in the first year. Closing costs are estimated at $25 million, however, Cott said it expects to receive a $75 million cash tax benefit related to the acquisition.

The companies expect the transaction to save them about $20 million a year, including $14 million in 2011.

Looking ahead, Cott also forecast total revenue of $426 million for the second quarter. It cautioned that actual results could vary by up to 2 to 3 percent. On average, analysts surveyed by Thomson Reuters expect sales of $433.3 million.

"Overall I am pleased with the preliminary results of our second-quarter performance, given the quarter saw a significant increase in much-publicized national brand promotional activity," Fowden said in a statement.

Deutsche Bank Securities Inc. and Drinker Biddle & Reath LLP advised Cott on the Cliffstar transaction.

Shares of Cott Corp. rose 15 cents, or 2.6 percent, to $5.88 in premarket trading Thursday.

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