Cott Corp., a producer of beverages for retailers, brand owners and distributors, has entered into a definitive stock purchase agreement to acquire S&D Coffee & Tea, the largest coffee and tea manufacturer and supplier to restaurants and convenience stores in the United States, for a purchase price of approximately $355 million on a debt and cash free basis.

Based in Concord, N.C., S&D was founded by J. Roy Davis Sr. and Lawrence Switzer to supply fresh roasted coffee to local and regional grocery stores in 1927. After his father’s death, J. Roy Davis Jr. expanded the business in 1965 to independent restaurants seeking to serve a growing demand for premium coffee and iced tea away from home. Over the years, the family-owned business grew into private enterprise with more than $550 million in estimated revenues this year. The acquisition is expected to enable further development and acceleration of S&D’s business model, according to the company.

Following the completion of the transaction, S&D will become a subsidiary of Cott and will continue to operate under the S&D Coffee & Tea name. Ron Hinson, president and chief executive officer, will remain in his role, and the management team will retain its responsibilities. The company said it will continue to innovate in coffee, tea and liquid extracts, and the business will remain in Concord.

“The Davis family, who founded S&D, deserves our gratitude for all they have done for our company, community and industry,” Mr. Hinson says. “Generations of people have benefitted from their vision, leadership and generosity.

“We could not be more pleased by what the future holds for our stakeholders, including employees and customers, due to this new strategic combination. The synergies S&D has with Cott, whether technology, supply chain, product, distribution channels or markets, are abundantly clear.”

As one of the leading providers in direct-to-consumer beverage services, Cott operates global businesses in office coffee services, direct-to-home and office water delivery and retail segments. The company’s portfolio includes coffee, brewed tea, bottled water, carbonated soft drinks, shelf-stable juice, still and sparkling waters, energy and sports drinks, ready-to-drink teas and micro-ground coffee, hot chocolate and cereals. Prior to the S&D acquisition, Cott employs more than 12,500 people with operations in 21 countries. With more than $3.3 billion in revenue, Cott is publicly listed on the New York Stock Exchange (COT) and the Toronto Stock Exchange (BCB.TO).

“The acquisition of S&D enables us to become a leading player in the coffee and tea categories due to their excellence as a manufacturer and their prominence as an elite supplier in the restaurant and convenience retail segments,” says Jerry Fowden, chief executive officer of Cott. “With S&D now part of the Cott family, we can further leverage cost efficiencies and growth opportunities across all the Cott companies.”  

He adds: "The addition of S&D brings our better-for-you beverage platform to over 65% of our adjusted EBITDA on a pro forma basis with carbonated soft drinks representing just 12% of adjusted EBITDA. After closing the S&D acquisition, we will have a leading position in the coffee and tea food service industry in North America, which is an excellent complement to our leading HOD water, office coffee and filtration business."