What happened

Shares of Primo Water (NASDAQ:PRMW) rose on Monday after Cott Corp. (NYSE:COT) announced that it had agreed to acquire the water dispenser company. Primo Water stock was up 24.3% at 1:40 p.m. EST today, while shares of Cott were down 5.4%.

So what

Cott will pay $14 per share for each share of Primo, comprised of $5.04 in cash and 0.6549 shares of Cott. Shareholders can elect to instead receive $14 in cash or 1.0229 shares of Cott. The deal is expected to close in March.

The acquisition is part of Cott's plan to transition into a pure-play water solutions provider. Cott will rebrand its corporate name to Primo Water after the acquisition is complete.

A chart showing a rising stock price.

Image source: Getty Images.

The combined company will have pro forma trailing-12-month revenue of roughly $2 billion, and adjusted EBITDA of roughly $324 million. Cost synergies of $35 million are expected to be realized over three years.

Now what

Cott CEO Tom Harrington said, "As we turn to our new business model, we are taking the opportunity to rebrand our company as Primo Water Corporation to reflect the leading position we have in the growing and attractive water market with the opportunity to be revalued in line with our water peers." 

Including Monday's decline, shares of Cott are down 12% over the past year. Shares of small-cap Primo Water are down 5% over the same period, even after the acquisition-fueled rally.