Constellation Brands (NYSE:STZ), the world’s largest vintner by sales, has inked a deal to sell its Australian and U.K. wine business to an Australian private equity company for roughly $290 million, an effort to shed the unit amid continued ailing sales.
The Victor, NY-based alcoholic beverage maker, operating under names such as Robert Mondavi and Corona, will sell to CHAMP Private Equity virtually all its Australian, U.K., and South African brands, wineries, facilities and vineyards, as well as its 50% interest in Matthew Clark.
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Constellation, which will maintain 20% interest in the business and receive about $230 million in cash, said it will use proceeds to help pay down debt.
The business, known as Constellation Wines Australia and Europe, or CWAE, has faced woes under the latest economic downturn and continues to undergo challenges despite efforts over the last two years to increase profitability.
“The business is no longer consistent with Constellation's strategy,” the company’s chief executive, Rob Sands, said in a statement. “We believe CHAMP has the requisite skills and motivation necessary for accelerating the success of the CWAE group.”
The move follows a wave of industry cutbacks amid struggling sales and ailing demand, including, most recently, news earlier this week that Brown-Forman (NYSE:BFA) is looking to sell its wine business. About three years ago, Fortune Brands (NYSE:FO) sold its U.S. wine business to Constellation for about $885 million.
The latest deal, subject to customary closing conditions, is expected to close by the end of January. Constellation, which said all employees will transfer with the business, noted the two companies will work together to distribute and supply each other’s products around the world.