Canandaigua Buys Franciscan Estates in Blockbuster Deal

Posted: April 22, 1999

In one of the biggest California winery deals ever, New York-based Canandaigua Brands -- which purchased Simi Winery in Sonoma County earlier this month -- announced today that it had reached an agreement to buy Napa Valley-based Franciscan Estates. The price was about $240 million, which includes the assumption of $20 million in debt. The sale is scheduled to close on June 1.

The deal gives Canandaigua, known primarily for its low-priced wine blends, a powerful presence in the California premium wine market. The Franciscan portfolio includes Franciscan Oakville Estate and Mount Veeder Winery in Napa Valley, Estancia in Monterey and Alexander Valley, and the distribution rights to Quintessa in Napa Valley and Veramonte in Chile. Franciscan Estates also owns 1,600 acres of vineyards in California and is a joint-venture partner in the 1,100-acre Veramonte estate in Chile's Casablanca Valley. Last year, the company made about 600,000 cases of wine and reported $50 million in sales.

Franciscan Estates was a privately held corporation owned by its chairman, Agustin Huneeus, and the Eckes family of Germany.

Huneeus said that in the past few years there had been several offers to buy the winery. The deal was finally sealed with Canandaigua because it offered the most independence in the operation of Franciscan, according to Huneeus; it will also provide cash to the Eckes family, who wanted to leave the wine business. "For 15 years the Eckeses didn't see a penny. They were very good partners. But to go 15 years and not make money is too much," Huneeus said. He emphasized that he will keep control of Quintessa and its 160 acres of Napa Valley vineyard, the Chilean properties, a vineyard in Alexander Valley and the recently acquired Lewis Ranch near the city of Napa.

The Franciscan and Simi properties will be managed together as a separate division of Canandaigua. Franciscan will retain its management, sales team and distributor network, and Simi will be added to its portfolio. Huneeus will stay on as Franciscan's chairman, Jean-Michel Valette remains as president and CEO and Agustin Francisco Huneeus continues as vice president of sales and marketing.

"It's an exciting and unique solution," said Valette, referring to the continuity of the management team. He also said he was looking forward to working with Simi. "For us as a management team and company, we now have access to Simi, and that's quite an accomplishment," he added.

Canandaigua Brands, headquartered in New York's Finger Lakes region, produces and markets wine, beer and distilled sprits in the United States and United Kingdom. The company's wine portfolio also includes Almaden, Arbor Mist, Cook's, Dunnewood, Estate Cellars, Marcus James, Manischewitz, Paul Masson, Mystic Cliffs, Wild Irish Rose and Vina Santa Carolina.

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