Vincor International has officially turned down Constellation's bid. In a directors' circular issued yesterday (3 November), the company recommended that shareholders reject the C$31 per share offer.

"After careful consideration and analysis and receipt of the recommendation of the Special Committee, the board of directors unanimously recommends that Vincor's shareholders reject the offer from Constellation to acquire all of the outstanding shares of Vincor International for a price of $31," said Mark Hilson, chairman of the board and of the special committee of independent directors.

"We believe that this offer significantly undervalues the business operations of Vincor, a view supported by BMO Nesbitt Burns and Merrill Lynch, who have provided their written opinions that the consideration offered to Vincor's shareholders under the offer is inadequate, from a financial point of view, to the shareholders. The board recommends that Vincor shareholders do not tender their shares to Constellation's inadequate offer."

Vincor said that it believes the offer to be significantly below the net present value of its stand-alone strategic plan.

"The multiples implied by the offer are lower than those implied by recent precedent transactions in the global wine industry," the company added. "In certain recent acquisitions, acquirors paid an average of 16.5 times total enterprise value to last twelve months earnings before interest, taxes, depreciation and amortisation, after adjusting for non-recurring extraordinary items (TEV/LTM EBITDA). The offer represents 12.2 times Vincor's TEV/LTM EBITDA, which is significantly below comparable transactions, and does not reflect any synergies that Constellation would realise from the acquisition of Vincor."

With cost synergies, the acquisition of Vincor would be accretive to Constellation up to C$76.14 per share, the company said.

The board of directors said that it is aggressively pursuing alternatives to the offer in order to maximise shareholder value. Vincor has entered into standstill and confidentiality agreements with a number of interested parties and discussions are in progress.

"We will continue to focus on our business objectives to grow our global wine portfolio while delivering improved financial results," chief executive Donald Triggs said. "We believe that Vincor shareholders have several options beyond that proposed by Constellation, and we intend to thoroughly explore each one."