Fortune Brands sells U.S. wine business
FAIRPORT, N.Y. -- Constellation Brands Inc. is staking a bigger claim in the more profitable end of the U.S. wine market with a deal to add Clos du Bois to its collection of $8 to $11 wines led by Robert Mondavi Private Selection.
The world's biggest winemaker said Monday it is paying $885 million for the U.S. wine business of Deerfield-based Fortune Brands Inc.
In addition to top-seller Clos du Bois, the buyout would give Constellation the Wild Horse and Geyser Peak brands, five California wineries and more than 1,500 acres of vineyards in the Napa, Sonoma and Los Carneros grape-growing regions.
Even with its latest acquisition, Constellation will control less than 5 percent of the highly fragmented global wine market. But its share of the American market will expand 1 percent to around 20 percent.
The beer, wine and spirits producer has been snapping up alcoholic-beverage businesses since the 1980s.
"This portfolio is an excellent fit and furthers our strategy of exceeding consumer expectations and expanding our presence in the growing high-end segments of the wine market," said its chief executive, Rob Sands.
Constellation shares slipped 39 cents, or 1.7 percent, to $22.60 Monday while Fortune Brands shares gained 49 cents to $79.66.
Fortune Brands makes consumer products ranging from Jim Beam bourbon to Moen faucets and Titleist golf equipment and is holding on to its Harveys sherry and Cockburns port brands. The sale will allow the company to focus on its higher-margin liquor business.
Led by Clos du Bois, which accounts for some 2 million cases, the Fortune Brands wines make about 2.6 million cases a year and posted $214 million in revenue last year including excise taxes. Other brands included in the buyout include Atlas Peak, Gary Farrell, XYZin, Buena Vista and J. Garcia.
The sale, expected to close by Dec. 31, is expected to slightly reduce both companies' earnings in 2008. Constellation is financing the deal with debt and said the purchase will add slightly to earnings per share in 2009.