Private Equity News & Analysis

CHAMP buys $293m stake in wine conglomerate

The Sydney-based firm is the latest to uncork a wine deal, buying a majority stake in NYSE-listed Constellation, whose labels include Clos du Bois.

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CHAMP Private Equity has acquired the Australian and UK subsidiaries of New York Stock Exchange-listed wine company Constellation Brands in a deal valued at around A$290 million (€219.4million; $293 million), the company said in a statement.

A filing made to the Securities Exchange Commission noted that following the deal, Constellation Brands will hold a 19.9 percent stake in each of the businesses. CHAMP will control the remaining 80.1 percent in each unit, which includes all of Constellation’s UK, Australian and South African brands, wineries, facilities and vineyards, its Japanese interests, and Constellation’s 50 percent holding in Matthew Clark, which owns and operates a UK drinks wholesale business.

The filing also noted that Constellation Brands will receive A$230 million in cash for the deal, although the figure is subject to certain adjustments. The deal is expected to close by January 31.

New York-headquartered Constellation’s brands portfolio includes Robert Mondavi, Hardys, Clos du Bois, Blackstone, Arbor Mist, Estancia, Ravenswood, Jackson-Triggs, Kim Crawford, Corona Extra, Black Velvet Canadian Whisky and SVEDKA Vodka.

Clos du Bois: in CHAMP's cellar
According to Rob Sands, president and chief executive officer of Constellation Brands, the company’s decision to sell its assets was made due to “challenging market conditions”. The statement also noted that the fresh capital injection would be used to “reduce borrowings”.

This is not the first cross-border Australian wine deal to have emerged as a potential private equity play in the last few months. In October last year, the chairman of Australian beverage conglomerate Foster’s told reporters it had rejected a bid for its wine-making assets, Treasury Wine Estates, made by US private equity firm Cerberus Capital.

The company said the bid, reportedly in the region of around A$2.7 billion, “significantly undervalued” its assets, but noted it was prepared to hear other offers.

Following that, it was reported that global firms KKR and TPG were also considering putting together an offer for the company, either together or separately, although this could not be confirmed.