Cott Corp. (COT - Get Report) said Thursday it would acquire DSS Group Inc. in a $1.25 billion deal that would expand the private label drink maker into coffee.

DSS is parent of DS Services Holdings Inc., an Atlanta-based direct-to-consumer provider of bottled water, office coffee and water filtration services. The company, formerly known as DS Waters of America Inc., since last year has been owned by Crestview Partners LP.

The deal value includes assumed debt and the issuance of preferred shares to Crestview and other selling shareholders.

Toronto-based Cott, a maker of mostly carbonated beverages and shelf stable juices, said the deal would extend it into new markets and broaden its distribution platform by adding a national direct-to-consumer channel with 2,100 customer routes. Post-deal Cott would have pro forma Ebitda of more than $350 million on $3 billion in annual sales.

"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," Cott CEO Jerry Fowden said in a statement. "Following this acquisition, Cott will have a more growth oriented, higher margin business and a more balanced revenue and earnings base."

Cott said it has received committed financing from Barclays plc and Credit Suisse Group AG in support of the transaction, which the company expects to fund via a combination of a new bond issuance, borrowings under existing facilities and preferred shares to be issued. The company said that post-deal its gross profit and adjusted Ebitda margins should be 27% and 12%, respectively, compared to 12% and 9%, respectively, on a standalone basis.

The company said it intends to suspend its share repurchase program but continue its quarterly dividend. Post-deal DSS will operate as a subsidiary of Cott under the direction of current CEO Tom Harrington.

Credit Suisse is acting as financial adviser to Cott on the deal, with Drinker Biddle & Reath LLP serving as legal counsel.

DSS was advised by Barclays and Paul, Weiss, Rifkind, Wharton & Garrison LLP.