Completing a year of uncertainty, during which it was closely courted by Australian Vintage, Constellation Brands has sold 80% of its Australian wine business, plus its operations in the UK and South Africa to the private equity group CHAMP. The sale, which includes all its Australian, UK and South African brands, wineries, facilities, vineyards and the company’s 50% interest in Matthew Clark, the UK wholesale joint venture, nets the company AUD290 million. The Australian assets include labels such as Hardy’s, Leasingham, Houghton, Banrock Station, Yarra Burn, the House of Arras and Bay of Fires. Excluded from the sale is New Zealand’s second biggest winery operation based around the Nobilo and Kim Crawford labels, which was itself part of the BRL Hardy business bought by Constellation Brands in 2003 for AUD1.85 billion. The current Australian brand portfolio will continue to be distributed within Australia, the US and Europe through existing channels. Despite the scale of this inherent write-down, Moody’s has lifted its ratings outlook on Constellation from stable to positive, saying the deal would create a smaller but more profitable and transparent business with less risk Australia’s other major wine player of this size, Treasury Wine Estates, is however moving full steam head towards a demerger from its current parent, Foster’s. Finance industry players such as Deutsche Bank are saying that the Constellation deal should not be seen as a cue to derail this process, citing Treasury’s likely AUD100 million profit this year, the quality of its brands and its ongoing success in cost cutting.
