Chalone Wine Group has finally accepted the takeover offer from French winemaker Domaines Barons de Rothschild. The French company announced today (1 November) that it has entered into a merger agreement with Chalone allowing it to buy the 51% of Chalone that it does not already own.

The offer, at US$11.75 per share, represents an increase of US$2.50 on the initial offer of US$9.25.

In connection with the acquisition of Chalone, Rothschild, Constellation Brands and The Huneeus Family intend to form a new joint venture company, containing assets from each partner, including Chalone.

The merger agreement was approved by the Chalone board of directors following a recommendation for such approval by the special committee of independent directors formed to review and evaluate the proposed offer. It was signed on Saturday (30 October).

In a statement, Richard Sands, Constellation Brands chairman and CEO, said: "This partnership will create one of the strongest independent fine wine companies in the world. This, in combination with the many strengths each of the partners brings to the company, will result in a wine portfolio that will complement our existing offerings and investments."

Consummation of the merger agreement between DBR and Chalone is subject to the affirmative vote of a majority of the outstanding shares of Chalone which shall include the affirmative vote of a majority of the votes cast by shareholders, other than DBR and its affiliates, at a meeting of Chalone shareholders. The transaction is subject to usual and customary conditions to closing, which are anticipated to be satisfied by sometime early next year.

Immediately following the merger, Rothschild will transfer to the new joint venture substantially all of the premium assets and brands of Chalone; The Huneeus Family will contribute the Quintessa winery, vineyards and brand; and Constellation Brands will contribute the Oakville vineyard owned by Franciscan Estates, Constellation Brands' fine wine company.

Agustin F. Huneeus will be named chief executive officer of the new company. Christophe Salin, president of Rothschild and chairman of the board of directors of Chalone, will be named chairman of the board.