Constellation Brands agrees to buy Canadian winemaker Vincor for nearly $1.1 billion

Monday, April 3rd 2006, 10:13 am

By: News On 6

FAIRPORT, N.Y. (AP) _ After a three-month hiatus, Constellation Brands Inc. said Monday it has finally struck a deal to acquire Canadian winemaker Vincor International Inc. for nearly $1.1 billion.

The world's biggest winemaker had dropped its hostile takeover attempt in January after Vincor shareholders passed on a $1 billion cash bid. It had raised its bid several times over a three-month period.

Under an agreement disclosed Monday, Constellation will pay 36.50 Canadian dollars ($31.07) per share, or about $1.09 billion, in cash for Vincor's 34.8 million shares outstanding. In addition, Constellation will assume about 250 million Canadian dollars ($220 million) in debt.

The deal was approved by both company's boards but still must be approved by shareholders.

Constellation said the price is at a premium of 15.9 percent to Vincor's closing price on Friday, and represents a 55.5 percent premium to Vincor's price on Sept. 27, before Constellation made its initial offer.

Constellation said it received financing for the transaction, which it expects to close in June. The deal will modestly boost its earnings per share in fiscal 2007, it said.

Analysts surveyed by Thomson Financial expect Constellation to earn $1.77 per share in 2007. The company releases its fourth-quarter earnings for 2006 on Thursday.

``We are pleased that Constellation has offered a value that fully recognizes our strong brands, exceptional work force and significant international growth opportunities,'' said Vincor's chief executive, Donald Triggs.

Based in Mississauga near Toronto, Vincor is North America's fourth-largest wine producer with $565 million in fiscal 2005 revenues and 2,000 employees in Canada, California, Washington state, New Zealand, Australia and South Africa. Its brands include Inniskillin, Jackson-Triggs, Toasted Head, Hogue and R.H. Phillips.

``This is a mutually beneficial transaction because it is a natural fit for both companies,'' said Constellation's chief executive, Richard Sands. ``Canada will become a core market for Constellation, while adding new and existing brands to our already formidable portfolio in other key markets.''

Constellation's A shares rose 34 cents to $25.39 in morning trading on the New York Stock Exchange.

The buyout was just the latest in Constellation's 18-year-long acquisition spree. Founded in 1945 in upstate New York's grape-growing Finger Lakes region, Constellation is now the only beer, wine and spirits company based in the United States and quietly became the world's No. 1 winemaker in 2003.

It jumped further ahead of longtime American wine leader E.& J. Gallo Winery when it bought Robert Mondavi Corp. for $1.3 billion.

Based in the Rochester suburb of Fairport, Constellation boasts more than 200 brands ranging from jug wines to coveted California reds, beer imports such as Corona and St. Pauli Girl, and liquors like Fleischmann's vodka, Skol gin and Black Velvet Canadian whiskey.