Constellation Selling Hardys, U.K. Wine Business for $290 Million

Wine company refocusing on U.S. business as it continues to restructure
Dec 23, 2010

Constellation Brands is selling BRL Hardy and the rest of its underperforming Australian and U.K. wine business in a deal worth about $290 million. The buyer is CHAMP, a private equity firm based in Sydney, Australia.

Constellation, which is one of the world's largest wine companies, retains a 20 percent interest in the business and receives $230 million in cash proceeds. “The business is no longer consistent with Constellation’s strategy,” CEO Rob Sands said in a statement. The Fairport, N.Y.-based firm has been restructuring its wine divisions to pay off debt and focus on higher end and more profitable wine labels.

Brands in the sale include Banrock Station, Leasingham, Tintara, Yarra Burn and Hardys, as well as South African labels Flagstone, Kumala and Fish Hoek. Included in the sale are all facilities and vineyards, as well as all beverage and marketing businesses in the United Kingdom.

“They are primarily bulk wines,” Angela Blackwell, Constellation’s director of corporate communications, said of the brands. “They had volume but the profitability was not there.”

Constellation paid $1.1 billion for BRL Hardy in 2003 as part of a multiyear buying spree that included Robert Mondavi, Ravenswood and Clos du Bois. Along the way, Constellation built a huge debt load, which has been exacerbated by the bad economy. The Australian wine business has been hard hit in recent years as it faced new competition, particularly in the U.K., from the wines of South America, Spain and South Africa. (In 2008, Constellation sold multiple vineyards and production facilities in Australia.)

American brands such as Mondavi, Clos du Bois, Blackstone and Ravenswood are not affected. The company also retains ownership of New Zealand labels Kim Crawford and Nobilo.

The deal is expected to close by the end of January.

Winery Purchases and Sales Australia News

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