DUNKIRK - It is a new beginning for Cliffstar Corp.
An agreement was announced Wednesday by Cott Corp. to acquire Cliffstar, the leading private-label manufacturer of shelf stable juices, for $500 million, payable at closing, and subject to adjustments for working capital and other items.
Cott is the world's largest non-alcoholic beverage company as well as the world's largest retailer-brand soft drink company.
"This is great news for Cliffstar," said Kevin Sanvidge, executive vice president for administration at Cliffstar. "We're looking forward to this. ... It's a combination of two great companies."
Stanley Star, chairman of the board and co-founder of Cliffstar, called Cott "the right long-term strategic partner."
"Cott, like Cliffstar, has a long history of private label excellence and quality as well as close partnerships with its customers and suppliers," Star said. "In addition to a strong position in juice and various new age growth segments, Cliffstar brings expertise in juice ingredients, processing and bottling that are complementary to Cott's strengths in carbonated soft drinks. I believe the combination will be beneficial for Cliffstar's employees, customers and suppliers into the future."
Companywide, Cliffstar has 1,250 employees with 600 at the Dunkirk location.
Sanvidge says the partnership can only mean great things for the Dunkirk plant.
"We're looking for growth here," he said. "We could possibly add a line of carbonated drinks (produced at the city location)."
Jerry Fowden, chief executive officer for Cott, also praised the partnership.
"As the clear leader in private label shelf-stable juice, Cliffstar is an ideal partner for Cott as we strengthen our position in private label beverages," he said. "A combination with Cliffstar expands Cott's product portfolio and manufacturing capabilities, enhances our customer offering and growth prospects, and improves our strategic platform for the future. Combined with Cliffstar, Cott will be a more diversified company with long-term advantages for our shareowners and retailer partners."
In addition to the $500 million due at signing, Cliffstar is entitled to $14 million of deferred consideration, which will be paid over a three-year period.
Cliffstar is also entitled to an additional contingent earnout consideration of up to a maximum of $55 million, based upon the achievement of certain performance measures during the fiscal year ending January 1, 2011, as well as the successful completion of certain expansion projects in 2010.
Cott expects to receive a significant cash tax benefit generated from the deduction of the step-up in tax basis resulting from the acquisition of Cliffstar's assets. The net present value of this cash tax benefit is estimated to be $75 million.
The closing of the transaction is subject to receipt of financing and other customary conditions, including receipt of required regulatory approvals.
Founded in 1970, Cliffstar, a privately-owned corporation headquartered in Dunkirk, is one of the leading suppliers of private label beverages and the largest private label producer of apple juice, grape juice, cranberry juice and juice-blends in North America.
Cliffstar, which had $654 million in revenue in 2009, operates 11 facilities in the United States, including five bottling and distribution operations, three fruit processing facilities, two fruit receiving stations and one storage facility.
Cliffstar in Dunkirk, pictured above, was recently acquired by Cott Corp, the world’s largest non-alcoholic beverage company and largest retailer-brand soft drink company.