Mr. Tom Harrington reports

PRIMO WATER ENTERS INTO AGREEMENT TO SELL SIGNIFICANT PORTION OF ITS INTERNATIONAL BUSINESSES FOR UP TO $575 MILLION IN CASH

Primo Water Corp. has entered into a definitive agreement whereby Culligan International will acquire a significant portion of Primo Water's international businesses in an all-cash transaction valued at up to $575-million. The transaction excludes the Aimia Foods, United Kingdom, Portugal and Israel businesses, but each of these will be sold across 2024.

"We are pleased to have reached an agreement that we believe unlocks significant value for Primo Water share owners. The transaction was the result of a pro-active board-led process that resulted in an agreement that offers an attractive premium valuation for a significant portion of our international businesses and simplifies and focuses Primo Water on our core North American water business," said Tom Harrington, chief executive officer of Primo Water. "Looking ahead, we will be laser focused on growing the North American business, increasing our profitability and margins, enhancing our balance sheet strength, and returning capital to share owners."

Transaction highlights:

• Up to $575-million all-cash purchase price for a significant portion of Primo Water's international businesses, unlocks substantial share owner value;
• Attractive premium valuation multiple of approximately 11 times adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) based on trailing 12 months ended July 1, 2023;
• Upon closing the transaction, Primo Water intends to repay the outstanding balance on its cash flow revolver, with a long-term goal of sustaining adjusted net leverage under 2.5 times adjusted EBITDA;
• Also upon closing, an incremental $25-million share repurchase will be authorized, revising the share repurchase authorization to $75-million.

A simplified, North American focused Primo Water

The transaction marks another major milestone in Primo Water's transformation as a company. Following the completion of the transaction, the simplified, pro forma Primo Water will have:

• Greater focus on its pure play North American water business, where it enjoys national and local scale and is one of the leading players;
• An improved financial profile, accelerating the achievement of several previously announced 2024 targets, including improvements in adjusted gross margins, adjusted EBITDA and adjusted EBITDA margins as well as adjusted free cash flow conversion;
• The financial flexibility to pursue organic growth, reduce leverage, return capital, accelerate accretive tuck-in acquisitions, and engage in strategic opportunities complementary and adjacent to its core North American water business;
• A diversified business mix across water dispensers, water direct, water exchange, water refill, water filtration, as well as a balanced mix of residential and commercial customers.

Closing and approvals

The transaction is expected to close by Dec. 31, 2023, subject to the receipt of regulatory approvals and the satisfaction of other customary closing conditions. For more information, please see Primo Water's Form 8-K filed in connection with the signing of the transaction. The closing of the transaction is not subject to any financing condition.

Advisers

BMO Capital Markets Corp. is acting as exclusive financial adviser and White & Case LLP is serving as legal adviser to Primo Water.

Conference call

Concurrent with its previously scheduled third quarter 2023 earnings release conference call, Primo Water will host a conference call, to be simultaneously webcast, on Thursday, Nov. 2, 2023, at 10 a.m. Eastern Time. A question-and-answer session will follow management's presentation. To participate, please call the following numbers.

North America:  888-664-6392

International:  416-764-8659

Conference ID:  93280528

This is a live, listen-only dial-in telephone line.

A slide presentation and live audio webcast will be available through Primo Water's website. The earnings conference call will be recorded and archived for playback on the investor relations section of the website for a period of two weeks following the event.

About Primo Water Corp.

Primo Water is a leading pure play water solution provider in North America and Europe and generated approximately $2.2-billion in annual revenue in 2022. Primo Water operates largely under a recurring revenue model in the large-format water category (defined as three gallons or greater). This business strategy is commonly referred to as razor/razor blade because the initial sale of a product creates a base of users who frequently purchase complementary consumable products. The razor in Primo Water's revenue model is its industry-leading lineup of innovative water dispensers, which are sold through approximately 10,800 retail locations and on-line at various price points. The dispensers help increase household and business penetration, which drives recurring purchases of Primo Water's razor blade offering or water solutions. Primo Water's razor blade offering comprises of water direct, water exchange and water refill. Through its water direct business, Primo Water delivers sustainable hydration solutions across its 21-country footprint direct to customers, whether at home or to businesses. Through its water exchange business, customers visit retail locations and purchase a prefilled bottle of water. Once consumed, empty bottles are exchanged at Primo's recycling centre displays, which provide a ticket that offers a discount toward the purchase of a new bottle. Water exchange is available in approximately 17,500 retail locations. Through its water refill business, customers refill empty bottles at approximately 23,500 self-service refill drinking water stations. Primo Water also offers water filtration units across its 21-country footprint.

Primo Water's water solutions expand consumer access to purified, spring and mineral water to promote a healthier, more sustainable lifestyle while simultaneously reducing plastic waste and pollution. Primo Water is committed to its water stewardship standards and is proud to partner with the International Bottled Water Association (IBWA) in North America as well as with Watercoolers Europe (WE), which ensure strict adherence to safety, quality, sanitation and regulatory standards for the benefit of consumer protection.

Primo Water is headquartered in Tampa, Fla., United States.

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