TORONTO — In an effort to diversify its business away from the carbonated soft drink category, the Cott Corp. has entered into a $1.25 billion transaction to acquire DSS Group, Inc., a water and coffee direct-to-consumer services provider based in Tampa, Fla.

“The DSS acquisition substantially accelerates our diversification strategy, bringing a strong home and office water and coffee beverage platform and direct-to-customer delivery network into our portfolio,” said Jerry Fowden, chief executive officer of Cott Corp. “DSS is a market leader in the growing water and coffee services industries. It has established a scaled national direct-to-customer network and is led by an experienced senior management team.

“This acquisition meets all of the criteria established within our disciplined acquisition guidelines, including acquiring businesses within growing categories and with higher margins while enhancing product, package and channel diversification. Following this acquisition, Cott will have a more growth oriented, higher margin business and a more balanced revenue and earnings base.”

Cott expects the acquisition to be accretive to adjusted free cash flow per share in the first year. The company also said it expects to realize revenue opportunities within DSS base on Cott’s expanded product portfolio and access to new market channels.

The acquisition is expected to close at the end of January 2015. Upon completion, DSS will operate as a subsidiary of Cott and be based in Atlanta. Tom Harrington, DSS’s current c.e.o. and president, will lead the new subsidiary.