Constellation Brands has lined up the sale of two wine brands and a winery to The Wine Group.

The US drinks giant said today (23 January) that it has agreed to divest the Almaden and Inglenook wine brands and the Paul Masson winery in California to The Wine Group for US$134m.

The sale forms part of the company's "ongoing effort to focus on its premium wine offerings in the US" Constellation said. Almaden and Inglenook are table wines which retail for under $3.00 per 750ml bottle in the US.

"This transaction, when coupled with the recent acquisition of Clos du Bois … will allow our wine sales forces to focus on selling higher-growth, higher-margin premium wines," said Constellation's president and CEO, Rob Sands. "This change also demonstrates our commitment to improve return on invested capital."

The sale is expected to complete before the end of next month.

Almaden and Inglenook are table wines which retail for less than $3.00 per 750 ml bottle equivalent. The company said that its Mission Bell Winery, also in Madera, California, will be retained and allows the company to increase premium wine production in California's San Joaquin Valley wine producing region. This winery will also provide wine production services to The Wine Group for a period of time on a contract basis.

In a statement, the company said that the transaction is expected to result in a pre-tax loss of approximately $27m or an after-tax loss of $0.13 diluted earnings per share on a reported basis, and will be excluded from the company's comparable basis earnings per share.

Proceeds from the transaction will be used to reduce borrowings.

The impact of this transaction is expected to be slightly dilutive to ongoing reported basis and comparable basis diluted earnings per share for fiscal 2009.

The Almaden and Inglenook wine brands are expected to generate approximately $130m of net sales for fiscal 2008, and represent approximately 10m 9-litre cases of the company's US wine volume.

The proceeds from this transaction do not impact free cash flow, and therefore the company's free cash flow guidance for fiscal 2008 remains unchanged at $280 - $300m.