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Kendall-Jackson in Play as BRL Hardy Makes Bid

Tim Fish
Posted: May 4, 2001

The long-rumored sale of Kendall-Jackson winery, based in California's Sonoma County, may be closer to reality, as potential suitors lined up to submit bids to meet an apparent deadline today.

Kendall-Jackson Wine Estates spokesman Jim Caudill confirmed the winery is in discussion with several companies, including Australian wine producer BRL Hardy Ltd. A source inside Kendall-Jackson said that Friday was the final day to submit bids, although Caudill would not confirm this.

A number of companies have expressed interest in buying Kendall Jackson. Hardy has been Kendall-Jackson's most vocal suitor, and the company formally announced its bid Thursday. Other suitors are rumored to be Fortune Group Inc., Diageo, Allied Domecq and Brown-Forman.

Although Hardy declined to name its bid price, analysts generally expect Kendall-Jackson to sell in the $1.5 billion to $2 billion range. That would put a potential sale in the same league as Foster's Brewing Group's $1.5 billion buyout last year of Napa Valley's Beringer Wine Estates, considered the largest wine-company sale in U.S. and Australian history. By comparison, Australian wine giant Southcorp Ltd. paid $780 million in February to purchase its rival Rosemount Estate.

A decision by Kendall-Jackson is not expected immediately. The winery has reportedly hired investment bankers Morgan Stanley to evaluate offers. Hardy CEO Steve Millar admits, "It will be some time before we know the result."

Rumors about change at Kendall-Jackson have been rampant since founder Jess Jackson began dividing his empire into two distinct companies several years ago.

Kendall-Jackson Wine Estates retains core brands Kendall-Jackson, Pepi, Tapiz, Calina, Camelot, Villa Arceno and La Crema.

Jackson resigned as chairman of Kendall-Jackson Wine Estates last year to focus his efforts on Jackson Family Farms, which includes many of Kendall-Jackson's former premium labels: Stonestreet, Lokoya, Hartford, Cambria and Cardinale. Last year, Jackson also added Matanzas Creek to the fold for a reported $45 million. Combined, the two companies generate an estimated $345 million in revenue annually.

Kendall-Jackson's potential suitors include some of the world's biggest names in wine and spirits. This week, BRL Hardy -- Australia's second-largest wine producer behind Southcorp -- posted a net profit of $33 million (Australian $63.5 million) in 2000, up 27 percent from 1999. Brands include Hardys, Leasingham, Banrock Station, Hunter Ridge and Chateau Reynella.

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