The US drinks group Constellation Brands, Domaines Barons de Rothschild (Lafite) and The Huneeus Family announced today they are proposing the formation of a new independent company (joint venture) to create what would be one of the world's leading luxury wines companies.  The deal will include the acquisiton of the Chalone Wine Group.

Domaines Barons de Rothschild (Lafite) has made a written offer for a private acquisition of The Chalone Wine Group. Each share of Chalone common stock not owned by Domaines Barons de Rothschild (Lafite) (54%) would be converted into US$9.25 of cash.

Constellation Brands and Domaines Barons de Rothschild (Lafite) will provide the cash funding for the purchase of the Chalone shares.  The proposed joint venture would also provide current Chalone shareholders with wine club benefits and rights similar to those currently provided by Chalone.

Upon completion of the transaction, Domaines Barons de Rothschild (Lafite) will transfer to the new joint venture all of the premium assets and brands of The Chalone Wine Group, The Huneeus Family will contribute the very successful Quintessa winery, vineyards and brand, and Constellation Brands will contribute the prestigious Oakville vineyard owned by Franciscan Estates, Constellation Brands' fine wine company.  Also, as part of the proposed joint venture, Domaines Barons de Rothschild (Lafite) would develop, in Napa Valley, the first estate to produce a wine under its guidance.

Richard Sands, chairman and CEO, Constellation Brands said: "Each of the joint venture investors is strong individually - and combined they are industry icons of quality, innovation and financial stability. We are changing the way business has traditionally been done in the luxury segment, from primarily an individual company basis, to a collective partnership of some of the most respected members in the industry.  We are creating a new strategic platform for increasing our participation in the luxury wine business."

Baron Eric de Rothschild, managing director, Domaines Barons de Rothschild (Lafite) added: "We have been active participants over the past 15 years in Chalone's growth to its present leading position in the luxury wine field.  We feel that this proposed transaction establishes a stronger, more influential independent company and will provide management, employees and distributors with continuity and the greatest potential for future expansion and success in this highly competitive market environment. The strength of the proposed joint venture will come from the unique collection of top quality wine acreage it will own in the greatest North American appellations, and from its strong brands.  The proposed joint venture will be supported by the very diverse experience and dedication to quality, which the three partners bring to this endeavor."

Agustin Huneeus said: "I am very gratified to place Quintessa in this venture, which is dedicated to the creation of wines of "terroir," which has always been my interest and motivation.  I am also most gratified to be working with two exceptional heads of business:  Baron Eric de Rothschild and Richard Sands, Chairman of Constellation."

Agustin Francisco Huneeus, who left Franciscan Estates a few months ago to pursue entrepreneurial opportunities said; "The strength and breadth of this very fine wine portfolio will make the joint venture an interesting supplier to distributors, and give the Company a unique position in today's fragmented market."  It is expected that Agustin Francisco Huneeus of The Huneeus Family will lead the new joint venture.

The formation of the proposed joint venture and the purchase of the Chalone shares are subject to the execution of definitive agreements among the parties, due diligence by the proposed joint venture, and the formation of a special committee of The Chalone Wine Group Board to evaluate the offer made by the proposed joint venture.  If the special committee approves the offer, the offer to the Chalone shareholders will be put to shareholder vote, subject to the filing of a proxy statement.