Constellation merger with Australian Vintage creeps closer

The potential merger between Constellation Brands and Australian Vintage has moved a step closer after the two companies applied to the Australian Competition and Consumer Commission for an informal merger clearance.

While both companies say there are still various issues to be resolved before such a merger could take place, the submission has been made to give the ACCC time to consider any competition issues and does not guarantee a final agreement will be reached.

US-based Constellation is the world’s largest producer of wine crushing about 300,000 tonnes of Australian grapes each year and owning brands including Hardys, Yarra Burn, Bay of Fires and Banrock Station.

Last month it said it was considering selling off some UK and Australian assets in an effort to negate the pressures imposed by an increasingly challenging Australian wine market.

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

Australian Vintage chairman Ian Ferrier said of the deal: “We do see significant benefits, particularly given the structural imbalance in the industry in Australia, of reduced costs and other synergies from the combined operation.”

Alan Lodge, 16.12.2009