BRL Hardy and Constellation Plan Mega-Merger

Deal between Australian and U.S. companies would create another global wine giant.

Harvey Steiman
Posted: January 13, 2003

Constellation Brands, which has been aggressively buying other U.S. wine companies over the past few years, is in takeover talks with Australian wine giant BRL Hardy, the companies announced today. Reports in Australia valued the deal at A$1.5 billion (US$878 million).

Fairport, N.Y.—based Constellation and BRL Hardy, which are among the largest wine companies in the world, already have a strong relationship. The two joined forces in June 2001 to create Pacific Wine Partners, a Gonzales, Calif.—based venture that markets Hardy's wines in the United States and also produces Farallon and Blackstone wines.

"Discussions with BRL Hardy regarding a possible transaction are taking place," Constellation chairman and CEO Richard Sands confirmed in a press release, "but we have not yet reached agreement on a structure or transaction value. Bringing together Constellation and BRL Hardy would create the world's largest wine business, with leading positions in the world's key markets."

Analysts in Australia noted that a takeover would give Constellation -- which is traded on the New York Stock Exchange -- a ready-made portfolio of Australian brands that it already knows. BRL Hardy would not only solidify its access to the American wine markets, but would get a stronger presence in the United Kingdom through Constellation's subsidiary there, Matthew Clark.

BRL Hardy brands include Hardys, Banrock Station, Chateau Reynella, Leasingham and Yarra Burn in Australia, along with Nobilo in New Zealand. It also owns the distribution rights for Barossa Valley Estate, a high-end growers cooperative that makes the fabled E&E Black Pepper Shiraz. Last summer, the company formed a joint venture with Stellenbosch Vineyards in South Africa to produce new wines from the Cape region.

Constellation's wine divisions include Franciscan Estates, which encompasses the Franciscan Oakville, Estancia, Mount Veeder, Ravenswood and Simi brands from California and Veramonte from Chile. Its Canandaigua Wine Co. holdings range from Columbia in Washington to Cooks in California, along with imports such as Alice White from Australia and Marcus James from Argentina.

Read more about Constellation, Hardy and Pacific Wine Partners: