US packaged-water majors BlueTriton and Primo Water are confident their plans to join forces will not face regulatory hurdles from the national anti-trust body.
The merger of the two companies was announced yesterday (18 June).
Under the terms of the deal, BlueTriton shareholders will take 57% of the fully diluted shares of the new group, while Primo Water will secure the remaining 43%.
The net revenue of the new company will sit at $6.5bn, while adjusted EBITDA will be $1.5bn. The deal is expected to include up to $200m in estimated cost synergies, achieved over the next three years.
Speaking to analysts on a conference call following the announcement of the deal, Robbert Rietbroek, the CEO of Primo Water and the planned chief executive of the new company said it would hold: "a share... that was less than 3% of an overall $252bn beverages category in North America".
He added: "And if you look at the retail side of things, it's $135bn industry, [that] would be just below five share, so really, with a very low market share, forming a company that will continue to be a challenger to the much larger beverage companies that are out there.
"We are very confident that this is going to move forward, and we believe that it will continue to add competitiveness to the market."
Answering a separate question on the same issue, Dean Metropoulos, the incoming chairman of the as-yet-unnamed new business, added: "Given that small percentage and how large the category is, we're very well positioned."
Upon receiving approval from the Federal Trade Commission, the deal to create the enlarged company is expected to be finalised in the first half of 2025.
Incoming CFO Davis Hass said the group expects to start generating its $200m in cost synergies starting from the second half of 2025 by making changes to "a variety of business functions".
Within operations, the company would be looking at "optimising manufacturing locations, routes, branches and inventory management" and "brand portfolio alignment", Hass said. In procurement, the group wants to improve "manufacturing efficiencies and leveraging operating resources" and develop "direct material procurement".
Speaking on the "growth prospects" for the merged BlueTriton and Primo Water business, Hass added the group would be looking to expand its existing and new customer base and increase retail locations across North America.
He said the group would look to boost "consumer access to our complementary portfolios within different formats and channels" and to expand into "new channels and high-potential geographies as more parts of the country are challenged with access to safe high-quality drinking water".
Also featured in the growth plan was a plan "to accelerate... innovation efforts into high reward areas of the functional flavour and premium segments", Hass added.
During the call, Metropoulos also indicated the merger of BlueTriton and Primo Water would help it push further into the "healthy hydration category".
"That is not about carbonated drinks, it's not about beers, it's about healthy drinking. And they're also becoming more and more of a vehicle for healthy ingredients like crystallites and natural vitamins, so we see a lot of tailwinds in this wonderful space," he said.
