Brand exodus raises cash for Constellation

Constellation Brands is shedding more than 40 spirits brands from its portfolio in order to reduce loan debts. The $334 million deal with Sazerac Company includes the release of more than 40 brands.

Brands with which Constellation is parting company include Barton, Skol, Mr. Boston, Fleischmann’s, 99 schnapps, di Amore, Chi-Chi’s pre-mixed cocktail line and Montezuma Tequila.

The transaction also includes the release of certain distillery and bottling facilities, including those located in Bardstown and Owensboro, Kentucky, as well as a leased bottling facility at Carson, California.

The post-tax profits from the deal, said to be worth $210 million, will be offset against the company’s borrowings. Rob Sands, CEO of Constellation said: “This transaction is consistent with our strategic focus on premium, higher-growth and higher-margin brands in our portfolio, and allows us to continue the process of reducing debt, generating free cash flow, creating efficiencies and increasing ROIC."

This is a good example of how we are creating efficiencies in the business by leveraging our existing infrastructure to propel growth and enhance ROIC."

Constellation’s deal with the New Orleans-based company Sazerac is expected to close at the end of next month.

Jane Parkinson, 14.01.09