Accordingly, and for the reasons described in more detail below under Reasons
for the Company Boards Recommendation, the Company Board unanimously recommends that the holders of shares of Primo common stock tender their Primo shares to Purchaser pursuant to the offer.
A joint press release, dated January 13, 2020, issued by the Company and Cott announcing the offer, the mergers and the other
transactions contemplated by the merger agreement is included as Exhibit (a)(5)(A) to this Schedule 14D-9 and is incorporated herein by reference.
Background and Reasons for the Company Boards Recommendation.
Background of the Offer.
As part of its
ongoing evaluation of Primos business, Primos board of directors and senior management periodically review and assess Primos operations and financial performance as well as industry conditions that may affect Primos long-term
strategic goals and plans. These reviews include consideration of potential opportunities to maximize stockholder value, such as business combinations, acquisitions, and other financial and strategic alternatives.
On November 12, 2013, Primo entered into a strategic alliance agreement with DS Waters of America, Inc. (DS Waters), pursuant
to which DS Waters agreed to act as Primos primary bottler and distributor of three and five gallon purified bottled drinking water and as its primary provider of exchange and supply services in the United States. The strategic alliance
agreement resulted in DS Waters becoming Primos primary bottler and distributor in the United States. In connection with the entry into the strategic alliance agreement, Primo issued a warrant to purchase 475,000 shares of common stock to DS
Waters. The warrant was exercisable at an exercise price of $3.04 per share and was exercised in full on August 23, 2018.
On
December 12, 2014, Cott acquired DS Waters and it became a wholly-owned subsidiary of Cott. DS Waters subsequently changed its corporate name to DS Services of America, Inc. (DS Services).
On March 13, 2017, Primo entered into an amendment to the strategic alliance agreement that extended the initial term from
December 31, 2020 to December 31, 2025, and provided that the initial term would automatically renew for additional seven-year terms unless otherwise terminated in accordance with the terms of the strategic alliance agreement.
On December 31, 2017, the Company and DS Services entered into a second amendment to the strategic alliance agreement that, among other
things, modified the service incentive payable to DS Services.
On May 4, 2018, Legion Partners Asset Management, LLC and certain
affiliated entities and persons (collectively, Legion Partners) filed a Schedule 13D with the SEC in which they reported ownership of an aggregate of 1,604,366 shares of Primos common stock, or 5.2% of Primos outstanding
shares.
On June 8, 2018, Legion Partners filed Amendment No. 1 to its Schedule 13D in which it reported that its ownership of
Primos common stock had increased to an aggregate of 2,121,366 shares, or 5.8% of Primos outstanding common stock.
On
November 23, 2018, Legion Partners filed Amendment No. 2 to its Schedule 13D in which it reported that its ownership of Primos common stock had increased to an aggregate of 2,635,571 shares, or 6.8% of Primos outstanding common
stock.
Prior to February 2019, none of the discussions between representatives of Primo, DS Services or Cott involved the possibility of
an acquisition of Primo by Cott.
In February 2019, Thomas J. Harrington, Cotts Chief Executive Officer, contacted Billy D. Prim,
then Primos Executive Chairman and Director, and proposed a potential combination of Primo and Cott under the
16