UPDATE 2-Canada's Cott Corp to buy US-based water, coffee distributor

Thu Nov 6, 2014 12:36pm EST
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* Deal for $1.25 bln including debt, preferred shares issue

* Cott's reliance on private label products to fall

* Client base to now include homes, offices

* Deal expected to boost margins, revenue

* Shares rise as much as 16 pct in New York and Toronto (Adds CEO comment from call, details, background; updates shares)

By Shubhankar Chakravorty

Nov 6 (Reuters) - Canada's Cott Corp said it would buy a U.S. direct-to-consumer bottled water and coffee distributor to expand beyond private-label soft drinks and juices and widen its client base from retailers and distributors to consumers' offices and homes.

Cott's shares jumped more than 16 percent on Thursday after the company said it would pay $1.25 billion for DSS Group Inc, parent of DS Services of America Inc.

Cott said acquiring the owner of bottled water brands such as Alhambra and Belmont Springs would help it expand margins and reduce its dependency on its private-label products such as Vess soft drinks and Red Rain energy drinks, which now account for about two-thirds of sales.   Continued...