Major Wine Acquisition Process Approaching Finalization

Brian GermanIndustry, Wine

The wine acquisition agreement between Constellation Brands and E&J Gallo is continuing to approach the finish line. Each of the companies signed an Agreement Containing Consent Order with the Bureau of Competition. The U.S. Federal Trade Commission (FTC) has been closely involved with monitoring the pending transaction between the companies. Gallo is acquiring a portion of Constellation’s drink portfolio, including several related facilities. The consent order signals some of the final review processes for the deal.

wine acquisition

The proposed consent order will be reviewed by FTC Commissioners. A final review is expected to be issued within 45 days.  There have been several delays in in the process of finalizing the sale. It has taken 19 months since the wine acquisition was announced to arrive at what is expected to be the final phase. Terms of the sale have been amended several times after concerns were raised by FTC officials. Constellation initially planned on selling 30 wine brands and six facilities to Gallo for $1.7 billion.

An adjustment to the deal that was made back in May reduced the sale price to $1.03 billion. Constellation will also retain Cook’s California Champagne and J. Roget American Champagne. Gallo will still be acquiring brands including Black Box, Franciscan, Clos du Bois, and Wild Horse. In a press release, Constellation indicated the company anticipates the completion of the sale “in the fourth quarter of fiscal 2021.”

In separate but related wine acquisition deals with Gallo, Constellation plans to sell its New Zealand wine brand Nobilo for $130 million. The sale of the wine brand and related assets is expected to be completed around the same time as the other deal. Sazerac will also be purchasing Constellation’s Paul Masson Grande Amber Brandy brand for $255 million. Those sales are also dependent on FTC approval of the proposed consent order.

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Brian German

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Ag News Director, AgNet West