Constellation Brands to sell Almaden and Inglenook for $134M

Constellation Brands to sell Almaden and Inglenook for $134M

Constellation Brands to sell Almaden and Inglenook for $134M

Constellation Brands Inc.,the nation's largest wine producer and a major force in the Bay Area wine industry, said Wednesday will sell its Almaden and Inglenook wine brands, along with the Paul Masson Winery, to the Wine Group LLCfor $134 million.

The goal for Fairport, N.Y.-based Constellation (NYSE: STZ) is to focus more intensely on premium wine brands, company officials said Jan. 23. The deal is expected to close by the end of February, which is also the end of Constellation's fiscal year.

The San Francisco-based Wine Group is a privately held conglomerate that produces more than 24 million cases annually. It focuses on bargain brands such as Franzia, Corbett Canyon and Glen Ellen, as well as wines like Pinot Evil, Herding Cats and Cardinal Zin aimed at younger wine drinkers.

Almaden and Inglenook are low-end table wines that typically retail for less than $3.00 per bottle, according to Constellation, which said Wednesday it would retain its Madera-based Mission Bell Winery to help it boost premium wine production in the San Joaquin Valley region. The Mission Bell winery will also provide production services to the Wine Group "for a period of time on a contract basis," company officials said.

"This transaction, when coupled with the recent acquisition of Clos du Bois, the No. 1 super-premium U.S. wine brand, will allow our wine sales forces to focus on selling higher-growth, higher-margin premium wines," Rob Sands, Constellation Brands' president and CEO, said in the statement. "This change also demonstrates our commitment to improve return on invested capital."

In mid-December, Constellation Wines U.S., a unit of Constellation Brands Inc., completed an $885 million acquisition of Beam Wine Estates from Fortune Brands(NYSE: FO), including well-known Bay Area wines such as Clos du Bois, Gary Farrell and Geyser Peak.

Constellation said Wednesday's transaction is expected to result in a pre-tax loss of $27 million or an after-tax loss of 13 cents a share, and will be excluded from the company's comparable earnings per share. Proceeds will be used to reduce debt.

Constellation said the Almaden and Inglenook brands are expected to generate $130 million of net sales for fiscal 2008, and represent 10 million 9-liter cases of the company's U.S. wine volume.

Constellation earlier said the Beam Wine Estates brands sold 2.6 million cases in 2006, generating sales of $214 million. The new Constellation Wines structure features three distinct business units, the company said Jan. 9. They include:

§                Vintas, a new unit focused on premium and super premium wines.

§                Icon Estates, which will continue to focus on ultra-premium and luxury wine brands.

§                Centerra Wine Co.,which includes a diverse portfolio of imports, "value" and specialty wines.

Constellation confirmed last week that it plans to cut approximately 93 jobs at Beam Wine Estates and close Beam's Healdsburg headquarters within a year. The staff reductions, effective March 1, will cut roughly 18 percent of the 520 jobs at Beam Wine Estates' local headquarters and operations, according to Nora Feeley, a Constellation spokeswoman.

Overall, Constellation Brands has more than 250 brands in its international portfolio, and operates about 60 wineries, distilleries and distribution facilities. Major brands include Corona Extra, Black Velvet Canadian Whisky, the Svedka vodka line, Robert Mondavi wines, Ravenswood, Blackstone, Hardys, Banrock Station, Nobilo, Kim Crawford, Inniskillin, Jackson-Triggs and Arbor Mist, among others.