Australia/UK: Constellation and Australian Vintage could join forces

05 November, 2009

Constellation Brands is looking to Australian Vintage to improve the prospects of its Australian and UK businesses.

The company said in a statement that opportunities being pursued ‘may result in the sale of certain assets and a possible combination of a portion of Constellation’s Australian and UK wine operations with Australian Vintage in exchange for a substantial, but non-controlling, interest in the combined entity.’

According to Constellation, this potential combination would ‘better position the new entity for success in the current challenging operating environment’. If a transaction results, the combined companies would operate as a stand alone wine company, which would be listed on the Australian Stock Exchange (ASX).

Rob Sands, president and chief executive officer, Constellation Brands said: “The Australian wine industry is facing unprecedented negative operating conditions.

“This combination would create a more competitive entity better positioned to deal with the current environment.”

The discussions between Constellation Brands and AV are ongoing and there are a number of issues that need to be addressed.

“Constellation Brands remains focused on achieving stronger, more sustainable results by tightening the focus of the portfolio, optimizing assets and finding synergies across all aspects of the business,” concluded Sands.