S&D Coffee and Tea is a coffee roaster and provider of customised coffee, tea and extract solutions. Credit: Mike Kenneally on Unsplash.

Bottled and canned carbonated beverages distributor Cott has agreed to sell its S&D Coffee and Tea business to US-based Westrock Coffee Company for $405m.

The transaction amount to be paid on a debt-free and cash-free basis is subject to customary working capital adjustments.

Westrock Coffee is an integrated farmer-focused company, which offers a range of services including coffee sourcing, roasting, packaging and distribution to its customers worldwide.

Cott CEO Tom Harrington said: “The combination of the sale of S&D, along with the recent announcement of Cott’s acquisition of Primo Water Corporation, positions Cott to be a pure-play water solutions provider with financial metrics more in line with our water peers.”

Cott’s S&D Coffee and Tea business provides custom coffee roasting and blends iced teas for foodservice and convenience stores across the US. It also offers infused drinks, juices, syrups and cappuccinos.

Brown Brothers Harriman & Co’s private equity strategy BBH Capital Partners will be providing acquisition capital along with Westrock Coffee’s existing investors, including The Stephens Group.

For this deal, BMO Capital Markets served as Cott’s financial advisor, while Drinker Biddle & Reath acted as the company’s legal advisor.

Furthermore, Wachtell, Lipton, Rosen & Katz acted as legal advisor to Westrock Coffee.

The deal is scheduled for completion in the first quarter of 2020, subject to certain customary closing conditions and regulatory approvals.

Last month, Cott announced that it is considering ‘strategic alternatives’ for its S&D Coffee and Tea division.

The decision was part of the company’s strategic planning process of transitioning into a pure-play water solutions provider.