The Sand’s family who has a controlling stake in Constellation Brands (CBrands), has offered to to give up their voting control. The company informed on Monday that it “has received a non-binding proposal from the Sands Family to declassify the company’s common stock and transition to a single class common stock structure. The proposal contemplates that each share of Class B common stock would be converted into 1.35 shares of Class A common stock.”
In other words, the family is willing to convert its Class B shares, which carry 10 votes each, to Class A shares that carry one. In exchange for the loss in voting power, the family would receive 1.35 shares of Class A stock for each share of Class B stock, which was normally convertible one to one.
Through this transaction, the family would lose about 40% of the voting rights for CBrands, reducing its voting control from nearly 60% to about 20%, although they would remain the company’s largest shareholders.
“It is expected that the Sands Family will continue to be CBrands’s largest shareholder if a transaction were consummated on the terms proposed,” the company said
CBrands was founded by Marvin Sands in 1945 as Canandaigua Industries. The company was selling bulk wine to bottlers in the eastern United States. In 1973 the company went public. In the following years, the company bought several wineries and other related companies. In 2000, the company changed its name to Constellation Brands to reflect the wider scope of the company and its range of brands.
A major push came in 2013, when CBrands acquired GrupoModelo's US beer business from AB InBev. The transaction included full ownership of Crown Imports LLC which provided CBrands with complete, independent control of all aspects of the US commercial business; a brewery in Mexico; exclusive perpetual brand license in the US to import, market and sell Corona and the Modelo brands and the freedom to develop brand extensions and innovations for the US market.
In 1993, the founder Marvin Sandsstepped down as CEO and was replaced by Richard Sands, one of his two sons. When Richard Sands stepped down as CEO in 2007, his younger brother Rob Sands took over. In March 2019, Bill Newlands, the first top manager from outside the family took over the role as CEO and President of CBrands. Rob Sands was promoted Executive Chairman. His brother Richard Sands became executive vice chairman. (inside.beer, 19.10.2018)
In order to evaluate the family’s offer, CBrands’s Board of Directors has established a Special Committee to evaluate the proposal. Any definitive agreement with the Sands Family with respect to the potential transaction must be approved by the Special Committee as well as the Board of Directors. In addition, pursuant to the terms of the proposal, any potential transaction would require the approval of holders of a majority of the shares of Class A common stock that do not also hold shares of Class B common stock.
Although the press statement says that “the proposal was not made in connection with any other corporate transaction,” market observers believe that the move could pave the way for an agreement with Monster Beverage Corporation.
In November, Bloomberg reported that Monsterwas seeking a deal with CBrands without disclosing details. Experts speculated that a deal between Monster and CBrands could concern new products, like hard seltzer or cannabis drinks. (inside.beer, 22.11.2021)