It didn’t take long for the shareholder group pressuring Primo Water Corp.’s board of directors and management to cash out after the company announced Monday it was being bought in a deal valued at $755 million.
Activist hedge-fund group Legion Partners LP of Beverly Hills, Calif., reported in a regulatory filing Wednesday it had sold its entire 9.1% stake, or 3.57 million shares, in Primo.
Primo announced at 6:45 a.m. Monday it had agreed to be sold to Cott Corp., based in Mississauga, Ontario. Cott is paying $14 a share, or $549.4 million, plus assumption of Primo debt.
According to the filing, Legion sold 60,500 shares between Dec. 26 and Dec. 31 for a combined $696,258 in proceeds.
Three Legion affiliates conducted 60 separate sell transactions Monday and Tuesday. The share price in those transactions ranged from $13.85 to $14.01 for overall proceeds worth $49.56 million.
With the share price at $11.10 at the close of trading Friday, Legion’s stake was worth $38.93 million at that time.
That means Legion’s stake rose 27.3% in value, or by $10.63 million, from Friday’s stock market close to Monday’s opening.
Primo’s share price closed Thursday up 28 cents to $14.71. If Legion had not sold its shares, its holdings would have been worth $51.59 million.
Legion could not be immediately reached for comment about its decision. The filing did not indicate the buyers of the shares.
Legion submitted letters on Sept. 17 and Oct. 29 to shareholders that were harshly critical of then-chief executive Matt Sheehan, founder and chairman Billy Prim and several board members for what it called a financial underperformance. Sheehan succeeded Prim as chief executive in May 2017, but was terminated on Nov. 4, 2019.
Legion trailed only Capital Research Global Investors of Los Angeles, which held a 10.6% stake, or 4.16 million shares, as of July 31.
Legion bills itself as “deep value, long-term oriented active investors.” Its strategies include gaining representation on corporations’ board of directors to “impact policies or strategic direction or, in some cases, simply advocating specific business activities for the fundamental benefit of a portfolio company.”
Legion spent $36.38 million in June 2018 to take its first stake in Primo for 5.8% ownership and 2.12 million shares. It paid an average $17.30 a share.
In November 2018, Legion reported owning 2.63 million shares for a 6.84% stake worth $38.56 million. It paid an average $14.63 a share.
On May 10, Legion reported owning 3.09 million shares for a 7.91% stake worth $38.45 million. It paid an average $12.45 a share.
On Aug. 9, Legion reported owning its largest stake at 3.57 million shares worth $42.21 million. It paid an average $11.83 a share.
Primo would be the key element in Cott’s transformation into a pure-play water company. It said last week it plans to sell its S&D Coffee and Tea business that’s based in Concord. It bought S&D for $355 million back in August 2016.
The combined company will use Primo’s name, brand and stock symbol PRMW, though Primo would operate as a wholly owned subsidiary of Cott. Primo shareholders would own 16% of the combined company.
Cott said the name change would put the combined company “more in line with our peers.”
The deal is expected to close in March. Prim would join Cott’s board of directors, along with Primo board member Susan Cates.
Prim held just under 1.9 million shares of Primo, which represented a 4.7% stake, as of March 28. That stake was worth $27.95 million as of Thursday’s closing share price.
Prim also has 762,236 deferred stock units that he could acquire over the next three years.