Constellation and Australian Vintage in merger talks

02 November, 2009

Constellation has confirmed it is in discussions with Australian Vintage about creating a new wine company to counter “unprecedented negative operating conditions”.

Details of the talks follow months of speculation that the two companies were looking to tie-up a deal.

Constellation said it was looking at “a number of opportunities with various parties to improve the prospects of its Australian and UK businesses”.

It added: “These include opportunities which may result in the sale of certain assets and a possible combination of a portion of Constellation’s Australian and UK wine operations with Australian Vintage in exchange for a substantial, but non-controlling, interest in the combined entity.

"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, which would be listed on the Australian Stock Exchange.”

Rob Sands, president and chief executive officer for Constellation Brands, added: “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.”

However, Constellation stressed conversations were “preliminary and may not lead to a transaction”.

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