Constellation buys and sells

18 October, 2016

Constellation Brands has announced the sale of its Canadian wine business and is buying Charles Smith Wines, High West Distillery and a minority stake in Bardstown Bourbon Company.

The US-based producer and marketer of beer, wine and spirits with operations in the US, Canada, Mexico, New Zealand and Italy, sold its Canadian wine brands including Jackson-Triggs and Inniskillin, wineries, vineyards, offices, facilities, and Wine Rack retail stores (subject to regulatory approval) for approximately C$1.03 billion (US$784 million) to the Ontario Teachers' Pension Plan.

Constellation continues to  own Black Velvet Whisky and the related production facility in Lethbridge, Alberta, Canada.

Based in Victor, New York, the company says the transactions advance its strategy of focusing on premium, high-margin, and high-growth brands while building shareholder value.

Constellation says it is the No. 3 beer company in the US with brands such as Corona Extra, Corona Light, Modelo Especial, Modelo Negra and Pacifico.

It also claims to be the world's leader in premium wine, selling brands such as Robert Mondavi, Clos du Bois, Kim Crawford, Meiomi, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company's premium spirits brands include Svedka vodka and Casa Noble tequila.

Rob Sands, president and chief executive officer, Constellation Brands (pictured) said: “In April, we announced plans to explore an initial public offering for a portion of our Canadian wine business as part of our strategy to focus on premium, high margin and high growth brands. We seized the opportunity to sell the entire business in a value-enhancing transaction when it presented itself.

"The Canadian wine business is the leader in the Canadian wine market and is a long-term growth opportunity. Ontario Teachers' Pension Plan is well-respected with a proven track record for supporting and growing their investments, so we know the business will be in good hands."-

To improve its US wine portfolio, Constellation has also announced an agreement to acquire the Charles Smith Wines collection of five super and ultra-premium wines for approximately $120 million. The transaction, expected to close in October, includes Kung Fu Girl Riesling, Velvet Devil Merlot, Boom Boom! Syrah, Eve Chardonnay and Chateau Smith Cabernet Sauvignon. With this acquisition, Constellation Brands says it will solidify its position as the second leading supplier of Washington State wines.

Constellation has also completed its previously announced High West Distillery acquisition. The acquisition includes all of High West's operations and its portfolio of high-end American straight whiskeys.

With High West, which has experienced double-digit volume growth year over year for the past three years, Constellation Brands enters the dynamic and profitable high-end craft whiskey segment. Additionally, as part of the company's venture activity, Constellation recently acquired a minority stake in Bardstown Bourbon Company. “Investing in Bardstown, the largest new whiskey distillery in the US, jumpstarts our opportunity to further explore innovation in the brown spirits category,” said Sands. “With the acquisition of High West and the opportunity to work with Bardstown Bourbon Company, we are strategically advancing our spirits business with access to high-quality supply and state-of the-art production capabilities.”

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