Cott selling traditional beverage business to Refresco for $1.25 billion

Cott Corp. announced a deal Tuesday to sell its traditional beverage manufacturing business to Dutch company Refresco for US$1.25 billion.

The Toronto-listed company's Cott Beverages division is one of the world's largest producers of drinks on behalf of retailers, brand owners and distributors.

Cott said the sale would help position it to better grow its water, coffee, tea and filtration businesses both organically and with acquisitions.

"After a thorough strategic review in 2013, we developed an accelerated diversification and acquisition strategy in order to transform our company," Cott chief executive Jerry Fowden said in a statement.

"This transaction is very much in line with this strategy, and enables our traditional business to become an integral part of a larger global beverage manufacturing company that pursues the same high customer service and quality standards Cott has been known for throughout its history."

Proceeds from the sale are expected to be used to help reduce debt.

Refresco is an independent bottler of soft drinks and fruit juices for retailers and brands with production in Europe and the United States.

"This transaction is a significant enhancement to our buy and build strategy, which will provide Refresco with enlarged scale, synergies, and savings alongside Refresco's manufacturing footprint, geographic diversity, product range and customer service," Refresco chief executive Hans Roelofs said in a statement.

The deal is expected to close in the second half of this year, subject to certain closing conditions including regulatory approval, Refresco shareholder approval, and working capital adjustments.