M&A

1 November, 2009

Constellation mulls deal for Australian, UK units

NEW YORK, Nov 1 (Reuters) - U.S. wine and spirits maker Constellation Brands Inc (STZ.N) said on Sunday it is pursuing discussions with various companies to sell or merge a part of its Australian and U.K. wine operations.

Constellation is "pursuing a number of opportunities with various parties to improve the prospects of its Australian and U.K. businesses," the company said in a statement.

Constellation, which owns Robert Mondavi wines, has discussed a potential combination of part of its Australian and U.K. operations with Sydney-based wine company Australian Vintage Ltd, in exchange for a substantial but non-controlling interest in the combined company.

Such a deal would help the companies better tackle the challenges currently facing the wine industry, Constellation Chief Executive Rob Sands said.

If the talks end in a transaction, the combined entity would operate as a standalone wine company listed on the Australian Stock Exchange.

But these discussions are preliminary and may not result in a deal, Constellation said.

Constellation has already sold off some less-expensive brands and closed certain facilities, in the wake of an economic downturn that has softened sales and margins.

(Reporting by Anupreeta Das; Editing by Bernard Orr)

Source: http://www.reuters.com