Constellation in Negotiations to Sell
According to several sources, Constellation is in negotiations to sell the following wine brands: Geyser Peak (recently acquired from Fortune Brands), Gary Farrell (acquired from Fortune), Buena Vista Carneros (acquired from Fortune), Atlas Peak, Covey Run, Ste. Chapelle & Columbia Winery. The purchase price is allegedly $220-$225 million.
Details of the sale and the group acquiring the wineries are not yet confirmed. Jim DeBonis, former head of production at Simi Winery and most recently coo at Beam Wine Estates, is allegedly partnering and getting the money from GESD in San Francisco, which owns Boudin Bakery.
Wine & Spirits Daily heard the rumors earlier this week but couldn’t confirm them. When contacted by WSD, a spokesman at Constellation said: “It is our policy not to comment on rumors or speculation.”
The deal has been going on for weeks and is expected to close as early as today or Monday.
BACKGROUND. When Constellation reorganized its U.S. wine business in January, it reportedly decided it was time to shed these brands. After acquiring Geyser Peak, Gary Farrell and Buena Vista from Fortune, Constellation grouped the wineries together as a separate division within Vintas.
All of the brands are located in California, Washington or Idaho. Geyser Peak is in Geyserville, CA, Gary Farrell is in Healdsburg and Buena Vista Carneros is in the Sonoma Valley. Atlas Peak Vineyards is located in Napa, Covey Run is in eastern Washington, Ste. Chapelle is in Idaho and Columbia Winery resides in Woodinville, WA.
Recall that Constellation purchased Clos du Bois (a huge brand), Geyser Peak, Wild Horse, Buena Vista Carneros and Gary Farrell, as well as the associated vineyards, winemaking assets and sales organization from Fortune in November. The purchase price was $885 million.
Clos du Bois was a huge wine for Constellation and is expected to help the company better compete in the mid-price chardonnay market with Kendall Jackson.
So why might Constellation be interested in selling these brands, particularly the ones it just purchased from Fortune? Constellation needs to pay down its massive debt load prior to buying someone else. They reportedly have a debt payment coming up, and will use these funds to make the payment.
ACQUISITIONS ON THE HORIZON. At Constellation’s Investor Day last week, ceo Rob Sands said the company is interested in buying more wine brands, but not beer or spirits:
“We’re not that interested in beer acquisitions. Spirits are pretty over-priced right now on our take. There have been some good assets for sale but we don’t see you can generate a return.”
“In wine there will be opportunities for acquisition for selected brands and acquisitions on a global basis ...it still remains a highly fragmented category...not real big acquisitions in the vein of Mondavi, Vincor or Hardy because there aren’t any companies like that left...perhaps one or two but none for sale...but we will probably selectively fill in that portfolio will smaller acquisitions...geographical or gap filling,” he continued.
SANDS BROTHERS END BATTLE OVER TAX LOSSES
Robert and Richard Sands, ceo and chairman of Constellation Brands, have reportedly ended their two-year U.S. Court of Federal Claims battle to claim $120 million in tax losses rejected by the IRS, according to Janet Novack of Forbes’s Informer column.
The case centers on an investment firm in Dallas, Texas that left several wealthy investors (including the Sands family) at odds with the IRS over tax shelters (commonly known as a "son of boss" shelters) set up by the firm, which was sold by Dallas promoter Gary Kornman.
The Sands family filed a series of lawsuits over its disputed 2001 and 2002 personal income tax filings. The family claimed the IRS misinterpreted their filings and wrongly made them pay an additional $18 million in taxes and penalties.
During a tape-recorded meeting in 2001, Kornman told the Sands family that the deal was safe because the feds lacked a sufficient number of trained auditors, according to Forbes.
The IRS imposed penalties of up to 40% are still being fought by the Sands family members, who argue they had a "reasonable basis" and "acted in good faith."
"These (transcripts) are inaccurate, incomplete and fail to convey the true purpose of the transactions, such as investments and philanthropy," the family’s attorney, Tom Cullinan, has said in the past.
The Sandses "have already paid all claimed taxes and penalties and believe, based on previous IRS guidance, that their tax returns were correct as filed," he continued.
BROWN-FORMAN ON THE RIGHT TRACK
UBS maintained its buy rating on Brown-Forman yesterday, after the company reported a solid fourth quarter and fiscal year. Here’s what senior analyst Kaumil Gajrawala had to say:
“Jack Daniel’s volume trends stabilized in the US during 4Q, showing that the sales force restructuring and new marketing strategy is working. Going forward, BFB should continue to benefit from strong Gentleman Jack trends and easier comps as they lap the price increase.”
“In the US, we believe the Casa Herradura acquisition remains on track and expect solid growth, despite consumers shifting consumption from on-premise to off-premise.”
AUSTRALIAN BULK WINES DECLINING
Australian bulk wines are finally starting to drop off. The volume of wine exports fell 9% to 724 million liters in the 12 months to the end of May as bulk wine shipments start to decline. According to the Australian Wine and Brandy Corporation, bulk wine exports declined by 33% and soft-pack shipments were down by 41%. In the period, 190 million liters of Australian exports valued at $802 million were shipping to the U.S.
WSD BRIEFS:
BEAM GLOBAL HAS APPOINTED JULIAN COHEN as vice president of marketplace insights. Cohen will provide strategic counsel on consumer insights and research which will help to deliver on the Beam Global vision, “Building Brands People Want to Talk About.”
IN OTHER NEWS, WE HEAR THAT CASTLE BRANDS has hired the banking firm of Miller Buckfire in NY to run a full process and look for someone to acquire the business or pieces of it. The story is unconfirmed.
Until tomorrow, Megan
“Do not fear death so much, but rather the inadequate life.”
Bertolt Brecht
--------- Sell Day Calendar ----------
Today's Sell Day: 5
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
Details of the sale and the group acquiring the wineries are not yet confirmed. Jim DeBonis, former head of production at Simi Winery and most recently coo at Beam Wine Estates, is allegedly partnering and getting the money from GESD in San Francisco, which owns Boudin Bakery.
Wine & Spirits Daily heard the rumors earlier this week but couldn’t confirm them. When contacted by WSD, a spokesman at Constellation said: “It is our policy not to comment on rumors or speculation.”
The deal has been going on for weeks and is expected to close as early as today or Monday.
BACKGROUND. When Constellation reorganized its U.S. wine business in January, it reportedly decided it was time to shed these brands. After acquiring Geyser Peak, Gary Farrell and Buena Vista from Fortune, Constellation grouped the wineries together as a separate division within Vintas.
All of the brands are located in California, Washington or Idaho. Geyser Peak is in Geyserville, CA, Gary Farrell is in Healdsburg and Buena Vista Carneros is in the Sonoma Valley. Atlas Peak Vineyards is located in Napa, Covey Run is in eastern Washington, Ste. Chapelle is in Idaho and Columbia Winery resides in Woodinville, WA.
Recall that Constellation purchased Clos du Bois (a huge brand), Geyser Peak, Wild Horse, Buena Vista Carneros and Gary Farrell, as well as the associated vineyards, winemaking assets and sales organization from Fortune in November. The purchase price was $885 million.
Clos du Bois was a huge wine for Constellation and is expected to help the company better compete in the mid-price chardonnay market with Kendall Jackson.
So why might Constellation be interested in selling these brands, particularly the ones it just purchased from Fortune? Constellation needs to pay down its massive debt load prior to buying someone else. They reportedly have a debt payment coming up, and will use these funds to make the payment.
ACQUISITIONS ON THE HORIZON. At Constellation’s Investor Day last week, ceo Rob Sands said the company is interested in buying more wine brands, but not beer or spirits:
“We’re not that interested in beer acquisitions. Spirits are pretty over-priced right now on our take. There have been some good assets for sale but we don’t see you can generate a return.”
“In wine there will be opportunities for acquisition for selected brands and acquisitions on a global basis ...it still remains a highly fragmented category...not real big acquisitions in the vein of Mondavi, Vincor or Hardy because there aren’t any companies like that left...perhaps one or two but none for sale...but we will probably selectively fill in that portfolio will smaller acquisitions...geographical or gap filling,” he continued.
SANDS BROTHERS END BATTLE OVER TAX LOSSES
Robert and Richard Sands, ceo and chairman of Constellation Brands, have reportedly ended their two-year U.S. Court of Federal Claims battle to claim $120 million in tax losses rejected by the IRS, according to Janet Novack of Forbes’s Informer column.
The case centers on an investment firm in Dallas, Texas that left several wealthy investors (including the Sands family) at odds with the IRS over tax shelters (commonly known as a "son of boss" shelters) set up by the firm, which was sold by Dallas promoter Gary Kornman.
The Sands family filed a series of lawsuits over its disputed 2001 and 2002 personal income tax filings. The family claimed the IRS misinterpreted their filings and wrongly made them pay an additional $18 million in taxes and penalties.
During a tape-recorded meeting in 2001, Kornman told the Sands family that the deal was safe because the feds lacked a sufficient number of trained auditors, according to Forbes.
The IRS imposed penalties of up to 40% are still being fought by the Sands family members, who argue they had a "reasonable basis" and "acted in good faith."
"These (transcripts) are inaccurate, incomplete and fail to convey the true purpose of the transactions, such as investments and philanthropy," the family’s attorney, Tom Cullinan, has said in the past.
The Sandses "have already paid all claimed taxes and penalties and believe, based on previous IRS guidance, that their tax returns were correct as filed," he continued.
BROWN-FORMAN ON THE RIGHT TRACK
UBS maintained its buy rating on Brown-Forman yesterday, after the company reported a solid fourth quarter and fiscal year. Here’s what senior analyst Kaumil Gajrawala had to say:
“Jack Daniel’s volume trends stabilized in the US during 4Q, showing that the sales force restructuring and new marketing strategy is working. Going forward, BFB should continue to benefit from strong Gentleman Jack trends and easier comps as they lap the price increase.”
“In the US, we believe the Casa Herradura acquisition remains on track and expect solid growth, despite consumers shifting consumption from on-premise to off-premise.”
AUSTRALIAN BULK WINES DECLINING
Australian bulk wines are finally starting to drop off. The volume of wine exports fell 9% to 724 million liters in the 12 months to the end of May as bulk wine shipments start to decline. According to the Australian Wine and Brandy Corporation, bulk wine exports declined by 33% and soft-pack shipments were down by 41%. In the period, 190 million liters of Australian exports valued at $802 million were shipping to the U.S.
WSD BRIEFS:
BEAM GLOBAL HAS APPOINTED JULIAN COHEN as vice president of marketplace insights. Cohen will provide strategic counsel on consumer insights and research which will help to deliver on the Beam Global vision, “Building Brands People Want to Talk About.”
IN OTHER NEWS, WE HEAR THAT CASTLE BRANDS has hired the banking firm of Miller Buckfire in NY to run a full process and look for someone to acquire the business or pieces of it. The story is unconfirmed.
Until tomorrow, Megan
“Do not fear death so much, but rather the inadequate life.”
Bertolt Brecht
--------- Sell Day Calendar ----------
Today's Sell Day: 5
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 11:59 AM
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