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Primo Water (PRMW) to Merge With BlueTriton via Stock Deal

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Primo Water Corporation and an affiliate of BlueTriton Brands, Inc. (BlueTriton) announced a definitive agreement to create a hydration company in an all-stock transaction.

Upon completion of the transaction, shareholders of Prime Water and BlueTriton will own 43% and 57% of the fully diluted shares of the combined company.

Subject to necessary approval, the transaction is expected to close during the first half of 2025 and will generate $200 million in synergies. Post merger, the combined company will benefit from a diversified portfolio of iconic brands to provide high-quality service to consumers across product formats, channels, price points and usage occasions.

Water Industry Needs Consolidation

Per the American Society of Civil Engineers, at present, 50,000 community water systems and 16,000 wastewater treatment systems in the United States are providing water solutions to customers.

The fragmented industry creates operational challenges in meeting the requirement for replacement and adding to the aging water and wastewater infrastructure. Large water utility companies continue to acquire small players to ensure the extension of high-quality services to customers and the investment required to upgrade old and acquired assets.

The merger and acquisition bring in much needed investment in the water space.  Per the U.S. Environmental Protection Agency, an estimated $896 billion investment is necessary to maintain and expand the drinking water and wastewater service to meet demand over the next 20 years.

Water utilities like American Water Works (AWK - Free Report) , Essential Utilities (WTRG - Free Report) and California Water Service Group (CWT - Free Report) have well-chalked-out capital investment plans to strengthen infrastructure.

American Water aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in regulated businesses. AWK aims to invest in the range of $16-$17 billion in 2024-2028 and $34-$38 billion in 2024-2033.

Essential Utilities plans to invest in the range of $1.3-$1.4 billion in 2024 for more than 5,000 planned projects and $7.2 billion in 2024-2028 to improve water and natural gas systems to better serve customers with the help of improved information technology.

California Water Service plans to invest more than $380 million in capital expenditures in 2024.

Price Performance

Over the past six months, Primo Water has gained 46.7% against the industry’s 3.9% decline.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank

Primo Water currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 


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