Constellation Brands is going to revise its purchase agreement with E. & J. Gallo in connection with the Federal Trade Commission (FTC) review process.
In April 2019, the company announced to divest more than 30 wine and spirits brands, along with six winemaking facilities located in California, Washington, and New York. The sale, was valued at that time with USD1.7 billion (inside.beer, 9.4.2019).
According to the newly revised agreement, Constellation’s Mission Bell winery and certain related real estate, equipment, contracts, and employees are now excluded from the transaction. The revised agreement was amended to support Constellation’s production needs following its decision to retain Cook’s California Champagne and J. Roget American Champagne.
Excluding the Mission Bell facility and related assets from the transaction results in an adjusted transaction price of approximately USD 1.03 billion, subject to closing adjustments, of which USD 250 million is an earnout if brand performance provisions are met over a two-year period after closing.
The revised transaction is expected to close in the second quarter of fiscal 2021 and is subject to FTC review and clearance. Constellation also expects to close its separate but related transaction with Gallo to divest the New Zealand-based Nobilo Wine brand and related assets for USD 130 million, by the end of the second quarter of fiscal 2021, subject to FTC review and clearance.
“This move puts us one step closer to finalizing this transaction,” said Bill Newlands, President and Chief Executive Officer, Constellation Brands. “We continue to work in collaboration with Gallo to satisfy all FTC obligations, and both companies remain fully committed to closing the transaction. Our wine and spirits transformation strategy continues to gain traction and we look forward to closing this transaction in the coming months.”