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Constellation Said To Plan IPO For Canadian Wine Unit This Year

Published on Jun 5 2016 8:00 AM in Drinks tagged: Featured Post / Canada / Wines / Constellation

Constellation Said To Plan IPO For Canadian Wine Unit This Year

Constellation Brands Inc., the beer, wine and spirits producer and marketer, is seeking a valuation of roughly C$1 billion ($771 million) for the initial public offering of its Canadian wine business later this year, according to people familiar with the matter.

The Victor, New York-based company, whose brands include Corona and Robert Mondavi wines, is working with Goldman Sachs Group Inc., Toronto-Dominion Bank and Bank of Nova Scotia on the offering, said the people, who asked not to be identified because the matter is private.

The spun-off company is expected to list in Toronto as early as the fall, the people said.

Representatives for Goldman and TD declined to comment. Representatives for Constellation and Scotiabank were not immediately available for comment.

Wine Valuing

Robert Sands, Constellation chief executive officer, said on an April conference call he believed the wine division was being undervalued within the broader business. At that time, he said the company hadn’t made an official decision to push ahead with the IPO.

“It doesn’t really get much visibility from a value perspective, and if we treat it more as a stand-alone entity, the fact that it is a very high-performing business in Canada will become a lot more visible,” Sands said during the April call.

The unit includes eight wineries and 160 retail locations across Ontario, making it the largest holder of independent retail licenses in the province, he said. Constellation acquired the bulk of the assets that will be packaged in the IPO through its 2006 acquisition of Vincor International Inc.

“Our Canadian business has a strong leadership team with extensive knowledge of the Canadian market,” Sands said. “They market and sell a winning portfolio of brands and have a proven track record of successful innovation and new product development that resonates with Canadian consumers.”

Splitting off any of its wine portfolio would make Constellation more reliant on beer, a division that it expanded in a major way with the 2013 acquisition of the Corona business in the U.S. and continued with last year’s $1 billion takeover of craft brewer Ballast Point Brewing & Spirits Inc.

Constellation said last year that it is Canada’s leading wine company. It owns six of the nation’s top 25 table wine brands, with Jackson-Triggs as the highest-selling label and Inniskillin as the top ice wine. Constellation said the business posted strong results in its most recent fiscal year, which ran through February.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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