Subscriber login Close [x]
remember me
You are not logged in.

Constellation could become more reliant on beer following reports of plans to float Canadian wine division

Published:  06 June, 2016

A shake-up up of Constellation Brands Inc's portfolio could be on the cards as plans emerge for an initial public offering of its Canadian wine business later this year.

The beer, wine and spirits giant is allegedly seeking an estimated valuation of $1 billion ($772.02 million) for the division, which includes eight wineries and 160 retail locations across Ontario.

The splitting off of its wine portfolio could mean that the company, which owns major brands such as Corona beer and Robert Mondavi wines, could become more reliant on beer.

The company made a huge leap into the beer category in 2013 when it acquired the Corona business in the US, followed up with last year's $1 billion takeover of craft brewer Ballast Point Brewing & Spirits Inc.

Robert Sands, Constellation chief executive officer, said earlier in the year that he believed the wine division at Constellation was being undervalued within the broader business.

"It doesn't really get much visibility from a value perspective, and if we treat it more as a stand-alone entity, the fact that it is a very high-performing business in Canada will become a lot more visible," he said.

In April, Constellation Brands Inc. announced its purchase Prisoner Wine Co along with is 2016 annual fiscal results, which show strong growth for the rapidly expanding company.

The figures showed that the company's beer portfolio - which includes Corona Extra and Modelo Especial - is responsible for the lion's share of growth, with a 22% increase from to $661 million to $806 million in the fourth quarter to February 29.

Constellation said last year that it is Canada's leading wine company.

It produces top selling label Jackson-Triggs and ice wine Inniskillin wine brands in Canada.

Constellation is working with Goldman Sachs Group Inc, Toronto-Dominion Bank and Bank of Nova Scotia on the offering, which is expected to list in Toronto in the autumn.