Constellation/Australian Vintage deal “50/50”, says McGuigan

03 December, 2009

The proposed deal that would see Australian Vintage (AVL) – formerly McGuigan Simeon Wines – merge with Constellation’s operations in the UK and Australia is far from being a done deal, the company stated this week.

Speaking to Drinks International, AVL general manager for UK & Europe, Paul Schaafsma, said: “There’s a lot of ifs and buts at this stage, but if the deal goes ahead we will take a controlling interest in Constellation’s operations in Australia and the UK.” This, he said, would cover all aspects including vineyards, production and distribution for all Constellation’s brands, including Hardys and Banrock Station.

While there would be “efficiencies” to be found, the company would preserve individual brand identities and styles in order to avoid brand cannibalisation, added Schaafsma. “We’ve been through the situation before,” he said, “where you find the efficiencies but lose the sales.”

Neil McGuigan, general manager operations and winemaking and younger brother of the company’s executive director Brian McGuigan, rated the chances of the deal going ahead as “Fifty-fifty” at this stage.

In his address to the company’s annual general meeting on Nov 25, chairman Ian Ferrier said: “We do see significant benefits, particularly given the structural imbalance in the industry in Australia, of reduced costs and other synergies from the combined operation.

“We believe the business would be better positioned to succeed in the current environment together rather than separately. The new combined business would continue as Australian Vintage Limited, listed on the Australian Securities Exchange.

“I can’t be definitive but at this stage our discussions are focused on a merger where Australian Vintage would purchase the Constellation business with Australian Vintage shares. We hope to be able to update you in January."

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