Constellation seeks asset sales to Australian Vintage

Constellation Brands has announced it is considering selling some UK and Australian assets to Australian Vintage in an effort to negate the pressures imposed by an increasingly challenging Australian wine market.

Constellation, the maker of Hardys, Leasingham and Banrock Station wines, said it would consider a sale in return for a “substantial” stake in Australian Vintage, which makes the McGuigan and Nepenthe wines.

In a statement released yesterday, Constellation said it was in talks with “various parties to improve the prospects of its Australian and UK businesses,” adding that any stake it takes in Australian Vintage would be “non-controlling”.

The statement said: “This potential combination would create synergies between the two companies, better positioning the new entity for success in the current challenging operating environment.

“If a transaction results, the combined companies would operate as a stand alone wine company.”

Constellation has already been evaluating the viability of its vineyards in an effort to reduce debts and cut down on unprofitable assets.

Rob Sands, Constellation’s chief executive officer, said: “The Australian wine industry is facing unprecedented negative operating conditions.

“This combination would create a more competitive entity better positioned to deal with the current environment.”

Although the statement said Constellation was in talks with “various parties”, the company has not named any other potential partners.

Alan Lodge, 02.11.2009