Cott explores industry consolidation benefits
April 26, 2007
by Jeff Gelski
TORONTO — Cott Corp.’s board of directors has adopted a shareowner rights plan while the company explores the potential benefits of industry consolidation, Cott said April 25. The following day, the retail brand soft drink provider said it had returned to profitably with net income of $4.8 million, equal to 7c per share on the common stock, for the first quarter ended March 31.
Cott has engaged financial and legal advisers to assist management and the board in discussions about industry consolidation.
"As previously disclosed, following the recent announcement of Cadbury Schweppes, P.L.C. regarding the separation of its confectionery and Americas Beverage business, Cott has responded to interested parties that have approached the company, and is exploring the potential benefits of participating in possible industry consolidation," the company said.
The shareowner rights plan is designed to protect Cott shareowners against "opportunistic and other unfair take-over tactics." The plan will give the board time to review any unsolicited take-over bids.
The company’s first-quarter profit came after a $2.1 million loss in the previous year’s first quarter. Revenues increased 1.5% to $400.2 million. Excluding the impact of foreign exchange, revenue was relatively flat compared to the previous year’s first quarter.
International business unit revenues grew nearly 26% to $104.6 million in the quarter. North American revenue declined almost 5% to $295.6 million because of overall industry softness and Cott taking action to rationalize underperforming stock-keeping units, product lines and customers.
"These actions have had a positive impact on North American gross margin, and the company plans to continue rationalization of unprofitable products where it makes sense to do so, despite the potential short-term negative impact on volume and revenue," Cott said.