Constellation offloads US wineries

Published: 23 July, 2008

Constellation Brands has sold a number of its US wineries as increases focus on its key brands and looks to reduce its borrowings.

The world's largest wine firm has received an offer of $209 million from Eight Estates Fine Wines for a number of its US wine assets.

A further $25m in payments could be received by Constellation if certain objectives are achieved by the buyer.

Included in the sale are assets for the following brands: Geyser Peak, Buena Vista, Gary Farrell, Atlas Peak and XYZin in California, which were acquired from Fortune Brands in December 2007; Columbia Winery and Covey Run (including Sunnyside winery) in Washington State; and Ste. Chapelle in Idaho, all acquired in 2001 from Corus Brands.

Collectively, these brands represented approximately one million cases of wine sold in calendar 2007.

Rob Sands, Constellation Brands president and CEO, said: "Sale of these assets will aid in streamlining Constellation's US wine portfolio by eliminating brand duplication and excess production capacity.

"We feel our customers and consumers are well served by our extensive California wine portfolio and by the Hogue Cellars brand produced at its Prosser, Wash., winery.

"This transaction also provides cash to further reduce our borrowings and demonstrates our commitment to improve return on invested capital."

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