Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading
beverage alcohol company, announced today that it and
E. & J. Gallo Winery have agreed to revise
their original transaction to divest a portion of Constellation’s
wine and spirits portfolio principally priced at $11 retail and
below, including related facilities located in California,
New York, and Washington. The new agreement will supersede the
original agreement announced in April 2019. The revisions to
the transaction are to address competitive concerns raised by the
FTC primarily related to the Sparkling Wine, Brandy, Dessert
Wine, and Concentrate categories.
As a result, the brands Cook’s California Champagne, J. Roget
American Champagne, and Paul Masson Grande Amber Brandy will be
excluded from the transaction resulting in an adjusted transaction
price of approximately $1.1 billion, of which
$250 million is an earnout if brand performance provisions are
met over a two-year period after closing. Combined, Cook’s, J.
Roget, and Paul Masson Grande Amber Brandy sell approximately
five million cases annually. As part of the ongoing
transformation strategy for the Wine and Spirits business,
Constellation is pursuing other opportunities to divest the brands
and Concentrate business excluded from the original agreement to
companies whose business strategies better align with the brands.
The revised transaction and the divestment of the excluded brands
are expected to close by the end of fiscal 2020 and are
subject to FTC review and approval.
In a separate transaction, Constellation has entered into an
agreement with E. & J. Gallo to divest the
New Zealand-based Nobilo Wine brand and related assets
for $130 million. This transaction is expected to close in the
first half of fiscal 2021 and is subject to FTC and
New Zealand regulatory review and approval. For the trailing
12 months ended August 31, 2019, the Nobilo brand generated volume
of approximately 550,000 cases, with net sales of nearly $40
million and CAM (gross profit less marketing) of approximately $19
million. In totality including Nobilo, case volume, net sales and
CAM (gross profit less marketing) to be sold to Gallo totaled
approximately 22 million cases, $860 million net sales and $330
million in CAM for the trailing 12 months ended August 31,
2019.
“We remain confident in our wine and spirits transformation
strategy and we are committed to continuing to work with Gallo and
the FTC to finalize this transaction,” said Bill Newlands,
Constellation Brands president and chief executive officer.
“We continue to focus our total portfolio to align with
consumer-led premiumization trends and growing segments of the
market. We believe pursuing a revised agreement is in the best
interest of the brands, our collective employees, business partners
and consumers. We aim to close as soon as possible and look forward
to a seamless transition while continuing to drive momentum in our
respective businesses.”
Constellation’s remaining wine and spirits portfolio represents
a collection of Power Brands including the iconic
Robert Mondavi brand family; The
Prisoner Wine Company brand family; Kim Crawford,
the #1 sauvignon blanc in the U.S. market; Ruffino, a leading
brand family of Italian wines; Meiomi, the #1 pinot noir in the
U.S.; and SVEDKA Vodka, the #1 imported vodka in the U.S. The
company’s portfolio also includes a collection of highly-rated,
high-end brands such as SIMI, Schrader Cellars, and
Mount Veeder Winery wine brands, and
High West Whiskey and Casa Noble Tequila, as
well as new premium wine innovations such as
Cooper & Thief, 7 Moons, and
Crafters Union.
Constellation will provide additional financial detail and
updated fiscal 2020 earnings guidance on the revised
transaction and the Nobilo wine brand transaction during the
company’s third quarter results conference call, scheduled for
Wednesday, January 8, 2020, at 10:30 a.m. EST. The conference
call can be accessed by dialing [+1-877-673-1771] and entering
conference identification number 4297819 beginning at 10:20 a.m.
EST. A live, listen-only webcast of the conference call will be
available on the company’s website, www.cbrands.com, under the
Investors/Events & Presentations section.
About Constellation BrandsConstellation Brands
(NYSE: STZ and STZ.B), a Fortune 500® company, is a leading
international producer and marketer of beer, wine and spirits with
operations in the U.S., Mexico, New Zealand, and Italy.
Constellation is the No. 3 beer company in the U.S. with
high-end, iconic imported brands such as the Corona and Modelo
brand families and Pacifico. Its high-quality, wine and spirits
brands include the Robert Mondavi and
The Prisoner Wine Company brand families,
Kim Crawford, Ruffino, Meiomi, and SVEDKA Vodka. The
company’s portfolio also includes a collection of highly-rated wine
brands such as SIMI and Mount Veeder Winery, spirits
brands High West Whiskey and
Casa Noble Tequila, as well as new wine innovations such
as Cooper & Thief, 7 Moons, and
Crafters Union.
Based in Victor, N.Y., the company believes that industry
leadership involves a commitment to brand building, our trade
partners, the environment, our investors and to consumers around
the world who choose our products when celebrating big moments
or enjoying quiet ones. Since its founding in 1945, Constellation’s
ability to see, meet and stay ahead of shifting consumer
preferences and trends across total beverage alcohol has fueled our
success and made us one of the top growth contributors in beverage
alcohol in the U.S.
To learn more, follow us on Twitter @cbrands and visit
www.cbrands.com.
Forward-Looking StatementsThis news release
contains forward-looking statements. All statements other than
statements of historical fact are forward-looking statements. The
word “expect” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words. These statements may
relate to business strategy, future operations, prospects, plans
and objectives of management, as well as information concerning
expected actions of third parties. All forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those set forth in, or implied by, such
forward-looking statements.
The forward-looking statements are based on management’s current
expectations and should not be construed in any manner as a
guarantee that such results will in fact occur or will occur on any
contemplated timetable. All forward-looking statements speak only
as of the date of this news release and Constellation Brands
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The revised transaction and the Nobilo transaction
are each subject to the satisfaction of certain closing conditions,
including the receipt of required regulatory or other governmental
approvals. The Nobilo transaction is also conditioned on completion
of the revised transaction. There can be no assurance that the
revised transaction or the Nobilo transaction will occur or will
occur on the terms or timetables contemplated hereby, that
Constellation Brands will receive any earnout (contingent
consideration) or any specific amount of earnout (contingent
consideration), or that Constellation Brands will successfully
monetize certain assets.
In addition to risks and uncertainties associated with ordinary
business operations, the forward-looking statements contained in
this news release are subject to other risks and uncertainties,
including completion of the revised transaction and the Nobilo
transaction on the expected terms, conditions and timetables;
regulatory requirements; actual purchase price adjustments; the
actual market performance of brands included in the contingent
consideration payment opportunity; the accuracy of all projections;
and other factors and uncertainties disclosed from time-to-time in
Constellation Brands’ filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for
the fiscal year ended February 28, 2019, as supplemented by
the company’s Quarterly Report on Form 10-Q for the
fiscal quarter ended May 31, 2019, which could cause actual
future performance to differ from current expectations.
MEDIA
CONTACTS |
|
INVESTOR RELATIONS CONTACTS |
Mike McGrew |
773-251-4934 |
michael.mcgrew@cbrands.com |
Patty Yahn-Urlaub |
585-678-7483 |
patty.yahn-urlaub@cbrands.com |
Amy Martin |
585-678-7141 |
amy.martin@cbrands.com |
Bob Czudak |
585-678-7170 |
bob.czudak@cbrands.com |
Alex Wagner |
415-912-3788 |
alex.wagner@cbrands.com |
Tom Conaway |
585-678-7503 |
thomas.conaway@cbrands.com |
A downloadable PDF copy of this news release enhanced with
multimedia links can be found
here: http://ml.globenewswire.com/Resource/Download/47c95303-a564-41e6-a3cc-eef705f5c951
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