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Constellation Brands and E&J Gallo complite $ 810 million wine deal

The sale includes part of the portfolio, five wineries and the polyphenolics asset

Constellation Brands has completed the sale of over 30 wine brands to E&J Gallo Winery, two years after the agreement was announced. Closing of deal follows Federal Trade Commission approval on December 23, 2020. A transaction valued at approximately $ 810 million, of which $ 560 million was delivered in cash and up to $ 250 million, delivered with payments of earnouts dependent on brand performance. The deal includes a portion of Constellation's wine and spirits portfolio priced primarily under $ 11 at retail, as well as five wineries located in California, Washington and New York, and the company's Polyphenolics business.

As a result of the agreement, E&J Gallo has expanded its operational footprint and offering portfolio with brands including Arbor Mist, Black Box, Clos du Bois, Estancia, Franciscan, Hogue, Manischewitz, Mark West, Ravenswood, Taylor and Wild Horse. The acquisition was first announced in April 2019 for $ 1.7 billion, however, several months later the terms were revised and many brands were barred from the deal to address competition concerns. As determined by the Federal Trade Commission order, E&J Gallo will sell two of its traditional dessert brands, Fairbanks and Sheffield, to Precept Brands.

"The closing of these deals strengthens our position in the wine and spirits business, and directs it towards accelerated revenue growth and good operating margin performance", said Bill Newlands , president and CEO of Constellation Brands. "We continue to see the resilience of consumer-driven premiumization trends and these moves are in line with our vision of building a winning portfolio of bold and distinctive high-end brands".
The company also closed another separate, but related, transaction for the acquisition of the Nobilo New Zealand Sauvignon Blanc brand and some related Constellation businesses for approximately $ 130 million. In a further transaction, Constellation divested some grape juice brands to Vie-Diel Company. Meanwhile, the company's deal with Sazerac to sell Paul Masson Grande Amber Brandy for approximately $ 255 million has been cleared by the Federal Trade Commission and is expected to close this month.

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EFA News - European Food Agency