Constellation licks its wounds

I am still pinching myself to make sure I am not dreaming. Constellation Brands Inc has agreed to sell its Australian and UK operations (excluding Leasingham – see below) to Champ Private Equity of Sydney in a transaction valued at $AUD290 million. This is one of the biggest discounts the wine industry has ever seen: a discount of 85% compared with the acquisition of $1.9 billion in 2003. For reasons which entirely escape me, Constellation is retaining a 20% share of the assets, so the cash payment it receives will be $230 million. The deal also extends to Constellation’s brands in South Africa, but excludes those in New Zealand. There is much more to this story to come out in the new year.