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Constellation in joint-venture talks with Australian Vintage

Published:  02 November, 2009

Constallation Brands is in discussion with Australian Vintage Ltd about merging part of its Australian and UK wine operations.

The world's largest winemaker, may sell some assets to Australian Vintage Ltd in return for a "substantial" equity stake.

The company said in a statement: "It is pursuing a number of opportunities with various parties to improve the prospects of its Australian and U.K. businesses. These include opportunities which may result in the sale of certain assets and a possible combination of a portion of Constellation's Australian and U.K. wine operations with Australian Vintage Ltd in exchange for a substantial, but non-controlling, interest in the combined entity."

It's statement specifies the aim would be to create synergies between the two companies, better positioning the new entity for success in the current challenging operating environment. If a transaction goes ahead the combined companies would operate as a stand alone wine company, which would be listed on the Australian Stock Exchange.

Rob Sands, president and chief executive officer, Constellation Brands said: "The Australian wine industry is facing unprecedented negative operating conditions," said "This combination would create a more competitive entity better positioned to deal with the current environment."