Constellation Brands Inc., the world’s biggest winemaker, is buying Fortune Brands Inc.’s U.S. wine business, maker of the Clos du Bois, Wild Horse and Geyser Peak brands, for $885 million, the companies said Monday.
Fortune Brands, based in Deerfield, Ill., makes consumer products ranging from Jim Beam bourbon to Moen faucets and Titleist golf equipment.
The sale will allow Fortune Brands to focus on its higher-margin liquor business. Constellation said the deal bolsters its stake in the U.S. premium wine business.
Based in a suburb of Rochester, Constellation will acquire more than 1,500 acres of vineyards in California and five California wineries under the deal. The wine brands being acquired posted 2006 revenue of $214 million including excise taxes.
Constellation Brands shares slipped 10 cents to $22.89 in morning trading Monday while Fortune Brands shares gained 58 cents to $79.75.
Fortune Brands, which is holding on to its Harveys sherry and Cockburns port brands, will get about $840 million after taxes and realize a gain of about $50 million to $60 million on the sale.
The sale, expected to close by Dec. 31, is expected to slightly reduce both companies’ earnings in 2008. Constellation is financing the deal with debt and said the purchase will add slightly to earnings per share in 2009.
Constellation’s 300-plus brands run from jug wines to coveted California reds such as Ravenswood and Estancia, beer imports such as Corona and St. Pauli Girl and liquors like Fleischmann’s vodka, Skol gin and Black Velvet Canadian whiskey.
The beer, wine and spirits company has been snapping up alcoholic-beverage businesses since the late 1980s. It acquired Australian vintner BRL Hardy Ltd. for $1.1 billion in cash and stock in 2003 in a deal that made it the world’s largest wine business.
It jumped further ahead of longtime wine leader E.& J. Gallo Winery of Modesto, Calif., when it bought Robert Mondavi Corp. for $1.3 billion. Last year, it bought Canada’s Vincor International Inc. for nearly $1.1 billion.