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Constellation and Gallo wine deal set for completion

A billion dollar deal between drinks group Constellation Brands and E&J Gallo, announced last year, is finally set for completion by the end of November.

Rumours of a potential deal surfaced in October 2018 when it was reported that Constellation was considering the sale of its US wine brands including Clos du Bois, Mark West, Arbor Mist and Cooks.

The following April, a US$1.7 billion deal between Constellation and Gallo was announced, which would see the former sell 30 of its lower priced wine brands, priced at US$11 and below per bottle, as well as six winemaking facilities.

However, in May, the deal was delayed after both companies received requests for additional information from the US Federal Trade Commission in connection with a review of the transactions submitted.

Since then it has been revised multiple times, with Constellation now retaining Cook’s California ‘Champagne’, J. Roget American ‘Champagne’, Paul Masson Grande Amber Brandy and Mission Bell winery.

In May 2020, the deal had been reduced to $1.03 billion. Brands still part of the deal include Clos du Bois, Black Box, Estancia, Mark West, Wild Horse, Franciscan, and Ravenswood.

In its latest financial statement announcing its second fiscal quarter results, Constellation said the Gallo deal will now close by the end of the third fiscal quarter of 2021 (by 30 November 2020).

A separate deal with Gallo, which sees Constellation sell its New Zealand wine brand Nobilo and related assets for $130 million, will complete at the same time, the statement said.

Net sales of Constellation’s wine and spirits division fell by 11% to $624.5m in the three months to 31 August 2020, compared to the same period in 2019.

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