ITALY/US: Constellation Brands in Ruffino wine dispute
Constellation Brands has begun arbitration against Ruffino partner
Constellation Brands is locked in a dispute over the ownership of Italian wine group Ruffino.
The majority shareholder in Ruffino, the Folonari family, is attempting to exercise its right to sell up to Constellation in return for up to EUR55m (US$71m), but the US-based wine group is disputing the move. Constellation has a 49.9% stake in the 134-year-old Chianti winemaker, while the other 51.1% is family-owned.
When Constellation acquired a stake in Ruffino in 2004, it signed a deal enabling the two other remaining shareholders in the company to 'put' their stakes to Constellation for an agreed price at any point during calendar 2010.
In May last year, the California-based wine giant bought out one of the shareholders for EUR23.5m, increasing its stake by 9.9% to the current 49.9% level. In December, the remaining shareholder also signalled its wish to sell up to Constellation.
However, Constellation said in accounts filed yesterday (10 January) that it has begun arbitration proceedings against the Folonaris, "alleging various matters which should affect the validity of the put option". The Robert Mondavi owner said that it is confident of victory. A spokesperson for the company declined to give further details.
Constellation accounts show that Ruffino's value has plummeted in the last couple of years. Constellation was forced to report a US$25.4m loss on the Italian company's value for the three months to 30 November 2009.
Constellation has sought to shed non-core wine assets in the last 12 months. In December, the group announced that it would offload its Australia and Europe business for AUD290m (US$290m) to Australia-based Champ Private Equity.
The CEO of The Wine Group has been appointed to the chairmanship of Californian wine trade body the Wine Institute....
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