Constellation rejects poison pill

Constellation Brands has asked the Ontario Securities Commission to halt trading of shares in Vincor International

Constellation Brands has asked the Ontario Securities Commission (OSC) to halt trading of shares in Vincor International after the Canadian winery adopted a shareholder rights plan that limited trading of its shares to those permitted by the board, writes Fionnuala Synnott.

The world’s largest wine producer argues that the shareholder rights plan, or so-called poison pill, is a tactical move by Vincor to frustrate Constellation’s hostile takeover bid and says it was adopted without the approval of Vincor’s shareholders. Donald L Triggs, president and CEO of Vincor, claims the bid is opportunistic and has recommended that shareholders reject the $1.18 billion offered by Constellation as inadequate.

Cartier Wines and Beverages, the winery part-owned by Triggs, first attracted the attention of the likes of Richard Sands, Constellation’s CEO and president, when it bought Inniskillin Wines, known for its premium ice wine. Cartier adopted the Vincor name shortly after the acquisition when it merged with T G Bright & Company. Today, Vincor styles itself as North America’s fourth largest winery by volume and generates half of its $549.6m sales outside Canada.

Constellation expects the cease-trading order to be granted following the OSC hearing on November 25.  If it is granted, shares will continue to trade normally but the rights will become inoperative. Constellation claims that this will make it easier for Vincor shareholders to tender their stock when Constellation’s bid runs out.

The pressure is now on Triggs, who has admitted that Vincor’s independence is in jeopardy regardless of the outcome of the bid, to find a more attractive offer for shareholders. So far no other buyers have come forward despite claims that Vincor is in discussion with other bidders.