Primo completes purchase of Culligan vending unit

By McClatchy Tribune Newspapers
Posted Nov. 18, 2010 at 7:34 a.m.

Primo Water Corp. said yesterday in a regulatory filing that it has completed the purchase of Culligan Stores Solutions, a unit of Culligan International Co. of Rosemont for $60 million in cash and $45 million in stock.

The Culligan group generates filtered water for refill vending machines and store-use water services in 4,500 retail stores in the United States and Canada. Culligan also sells empty reusable bottles at the sites.

Primo is owned by local busnessman Billy Prim, who is also the majority owner of the Winston-Salem Dash minor-league baseball team.

Primo said it completed the deal for the Culligan group on Nov. 10.

The deal, announced in June, was contingent on an initial public offering of more than 8.3 million shares that was completed Nov. 4. About $100 million was raised in the IPO. Primo said it would issue an additional 3.75 million shares to cover the stock commitment to Culligan.

The IPO could reach slightly more than 9.58 million shares if its underwriters, which include BB&T Capital Markets, exercise options to buy up to an additional 1.25 million shares to cover over-allotments. Those underwriters have 30 days to buy those shares at the IPO share price of $12.

In the filing, Primo said that the cash portion of the purchase price would be increased — and the stock portion decreased — by an amount equal to the net cash proceeds generated from the underwriters exercising those additional shares.

What Primo says it has gained from the Culligan Stores Solutions deal is a profitable group and its extensive distribution channels and systems — offering Primo the ability to provide one-stop shopping for consumers and eliminate a competing vendor with retailers.

The deal would expand Primo’s reach with several key customers, such as Wal-Mart, Target and Kroger, where it already sells packaged, single-serve bottled water and has bottle-exchange sites for 3-gallon and 5-gallon bottles.

The Culligan group had $26 million in sales last year and a profit of $4.3 million, according to Primo.

By comparison, Primo has not had a profitable year since being founded in 2004.

Primo’s stock debuted Nov. 5 at $12 a share. It reached as high as $15 a share in trading Nov. 5 before closing at $12.95, up 95 cents.

Since then the price has traded in the $13 range. Yesterday it finished up 3 cents to close at $12.98.

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