US drinks group Constellation Brands has agreed a $1.1 billion (US) takeover bid with Australian winemaker BRL Hardy to create the world's largest wine company.
BRL Hardy said its board had unanimously recommended a takeover offer from Constellation Brands of $10.50 a share in cash, stock or a combination of both.
The wine businesses of both companies will merge to form Constellation Wines and will have combined annual wine sales of about $1.7 billion. BRL chief executive Stephen Millar will become chief executive officer of the combined wine business and will report to Constellation Brands' current CEO Robert Sands.
Millar said the purchase would create new networks of sales for Australian wine. Sands said the merged entity 'would have a broader and more powerful wine portfolio to market worldwide, encompassing all price points and emphasising the fastest growing category 'New World' wines from the United States, Australia, New Zealand and Chile'.
The companies already have a strong relationship through their 50-50 US joint venture Pacific Wine Partners and during takeover speculation analysts said this would serve to boost the chances of the deal going ahead.
Constellation Brands is listed on the New York Stock Exchange and is one of the world's leading producers and marketers of beverage alcohol brands with a broad portfolio of wines, spirits and imported beers. Its labels include Barton Brands, Canandaigua Wines, Franciscan Estates winery and Matthew Clark of Britain.
BRL Hardy owns vineyards in most of Australia's wine regions as well as New Zealand, France and the US. Its key brands include Banrock Station and Hardys.
Australian players in the wine industry are attractive targets for global interests because of the relatively low cost base and high growth potential. Recent figures showed the US was the biggest growth market for exported Australian wines.
The proposed deal is still subject to several conditions including approval of BRL shareholders, courts and various regulatory authorities in Australia and the US.
