By Andrew Starke
The world’s largest wine company is no more as the US-based Constellation Brands has agreed to sell its Australian and UK wine businesses – Constellation Wines Australia and Europe (CWAE).
The deal sees Sydney-based Champ Private Equity acquire the wine operations, valued at about A$290 million, although Constellation Brands will retain a 20 percent stake.
The transaction will see Champ pay about A$230 million and it is expected to be completed by the end of January, 2011.
CWA is Australia's largest wine company ahead of the Foster's Group, Casella Wines, Pernod Ricard Pacific and Australian Vintage.
The acquisition includes virtually all Constellation's Australian, UK, and South African brands, wineries, facilities, vineyards, and the company’s 50 percent interest in Matthew Clark, the U.K. wholesale joint venture.
All CWAE employees will transfer with the business.
“During the last two years, Constellation has implemented a strategy focused on driving profitable organic growth through premiumizing its world class brand portfolio and improving margins, return on invested capital and free cash flow,” said Constellation Brands president and CEO Rob Sands.
“The CWAE business sells quality wines from the important Australian appellation and has significant scale, but continues to be faced with challenging market conditions.
“Therefore, the business is no longer consistent with Constellation's strategy. We believe Champ has the requisite skills and motivation necessary for accelerating the success of the CWAE group.”
Constellation Brands bought Australian vintner BRL Hardy for $A1.1 billion in 2003 and the iconic Californian winery Robert Mondavi in 2004 to surpass US rival E&J Gallo Winery as the world's largest wine business.
Under the terms of the deal, Constellation and Champ will work together to distribute and supply each other's products globally.
"CHAMP is committed to supporting management in building a competitive and profitable business in the Australian and U.K. markets and will invest to grow the business," said Champ managing director, John Haddock.
"I extend my sincerest appreciation to the talented CWAE employees for their outstanding efforts over the years, in particular for producing some of the best Australian wines and maintaining a leadership position in the U.K.”
Contacted by TheShout, a spokesperson for Constellation Wines Australia said it was too early to comment on the next step and time frames involved, citing the restrictions that listed companies operate under.
Constellation Brands delisted from the Australian Stock Exchange last month (Nov 24) but maintains a primary listing on the New York Stock Exchange.
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