US: Constellation to buy Fortune's wine business

Constellation Brands is to acquire the wine business of rival US group Fortune Brands in a deal worth US$885m.

The transaction, which is expected to close by 31 December, includes a portfolio representing approximately 2.6m cases. Brands being acquired include Clos du Bois, Geyser Peak and Wild Horse. More than 1,500 acres of vineyards in Napa, Sonoma and Carneros, California are included in the purchase, in addition to five California wineries.

"This portfolio is an excellent fit and furthers our strategy of exceeding consumer expectations and expanding our presence in the growing high-end segments of the wine market," said Rob Sands, Constellation's president and CEO.

"We are delighted about the prospect of adding these wineries and brands to our existing portfolio, which will enhance our growing position in the US premium wine business. As an example, Clos du Bois, a 2m-case brand, has a history of strong consumer brand equity, growth and profitability. We also look forward to working with the people who have been responsible for the tremendous success of these wines."

The company estimates that, on a comparable basis, the purchase will be "slightly accretive" to diluted earnings per share for fiscal 2009 and "modestly dilutive" for fiscal 2008, assuming the transaction closes by the end of this year.

"A plan for the integration of this acquisition into Constellation will be finalised after the close of the transaction, and the company will determine the best way to effectively assimilate the brands and facilities," a statement said.

The transaction will be financed with debt and is subject to customary and routine regulatory approvals and other closing conditions.