Constellation Brands Inc., Victor, N.Y., announced that it and E. & J. Gallo Winery, Modesto, Calif., have agreed to revise their original transaction to divest a portion of Constellation’s wine and spirits portfolio principally priced at $11 retail and below, including related facilities located in California, New York and Washington. The new agreement will supersede the original agreement announced in April 2019. The revisions to the transaction are to address competitive concerns raised by the FTC primarily related to the sparkling wine, brandy, dessert wine and concentrate categories.
As a result, the brands Cook’s California Champagne, J. Roget American Champagne and Paul Masson Grande Amber Brandy will be excluded from the transaction resulting in an adjusted transaction price of approximately $1.1 billion, of which $250 million is an earnout if brand performance provisions are met over a two-year period after closing, the companies say. Combined, Cook’s, J. Roget and Paul Masson Grande Amber Brandy sell approximately 5 million cases annually. As part of the ongoing transformation strategy for the wine and spirits business, Constellation is pursuing other opportunities to divest the brands and concentrate business excluded from the original agreement to companies whose business strategies better align with the brands. The revised transaction and the divestment of the excluded brands are expected to close by the end of fiscal 2020 and are subject to FTC review and approval.