Constellation Brands Inc. to Acquire Remaining 50 Percent Interest in Crown Imports Joint Venture
(Thomson Reuters ONE) -
--Leading U.S. import beer business to become wholly owned--
VICTOR, N.Y., June 29, 2012 - Constellation Brands, Inc., (NYSE:STZ), which
currently owns 50 percent of Crown Imports LLC (Crown), a 50-50 joint venture
with Grupo Modelo S.A.B. de C.V. (Modelo), announced today that it has signed a
definitive agreement with Anheuser-Busch InBev SA/NV (AB InBev) to purchase the
remaining 50 percent interest in Crown as AB InBev completes its proposed
acquisition of Modelo. The purchase price is $1.85 billion and represents 50
percent of a multiple of approximately 8.5 times Crown's EBIT. The transaction,
which is subject to regulatory approval, is expected to close during the first
quarter of calendar 2013.
"This is a significant milestone in the history of Constellation Brands," said
Rob Sands, president and chief executive officer, Constellation Brands. "We have
been the importer, marketer and seller of the Modelo brands in the U.S. for
almost two decades. During this time, the Crown team has successfully built the
Modelo portfolio into an enviable position of leadership and growth. Our full
ownership of this significant beer business provides an additional strategic
lever for driving overall profitable organic growth. We expect this transaction
to dramatically enhance the financial profile of our company and it will
solidify Constellation Brands' position as the largest multi-category supplier
of beverage alcohol and the third largest total beverage alcohol company in the
U.S."
Crown's portfolio of brands includes Corona Extra, Corona Light, Modelo
Especial, Pacifico, Negra Modelo and Victoria. Corona Extra is the best-selling
imported beer and the sixth best-selling beer overall in the industry. Corona
Light is the leading imported light beer and Modelo Especial is the third
largest and one of the fastest growing major imported beer brands.
"Crown is currently experiencing significant marketplace momentum driven by new
products as well as innovation in advertising, marketing, promotions and
packaging," Sands added.
"This agreement provides certainty and continuity for Crown and its wholesaler
partners," said Bill Hackett, president, Crown Imports. "We look forward to
continuing to work with our wholesaler network to further grow the Modelo
portfolio of brands across the U.S. marketplace."
Under the terms of the transaction, Constellation Brands and Crown will have
complete, independent control of distribution, marketing and pricing for all
Modelo brands in the U.S., while AB InBev will ensure continuity of supply,
quality of products and the ability to introduce innovations. The new
importation agreement will be perpetual and provides AB InBev with the right,
but not the obligation, to exercise a call option every 10 years, subject to
regulatory approval, at a multiple of 13 times Crown's EBIT from the Modelo
brands.
Financial Highlights
Constellation Brands has fully committed bridge financing in place to complete
the acquisition. Permanent financing is expected to consist of a combination of
revolver borrowings, a new term loan under the company's current senior credit
facility and the issuance of senior notes.
"Upon closing, this transaction is expected to increase Constellation's debt to
comparable basis EBITDA leverage to the mid-four times range when factoring in a
full-year of the additional Crown EBITDA," said Bob Ryder, chief financial
officer, Constellation Brands. "Due to the anticipated strong free cash flow
generation of Constellation Brands, this leverage ratio should decrease to our
targeted range of three to four times within the first 12 months after the close
of the transaction. We plan to suspend our current share repurchase program. We
currently have approximately $700 million remaining under our one billion share
repurchase authorization."
During Constellation's fiscal 2012, Crown sold 164 million cases and generated
$2.47 billion of net sales and $431 million of operating income. The company
currently accounts for its 50 percent interest in Crown under the equity method
and recognized $215 million of equity earnings from Crown in fiscal 2012. Upon
completion of the transaction, the company will begin consolidating the full
financial results of Crown. As a result, this transaction is expected to be
significantly accretive to Constellation's on-going diluted EPS and free cash
flow results.
Constellation Brands will discuss this transaction on its first quarter fiscal
2013 earnings conference call scheduled for today at 10:30 a.m. (eastern.) The
conference call can be accessed by dialing +973-935-8505 beginning 10 minutes
prior to the start of the call.
About Constellation Brands, Inc.
As the world's leader in premium wine, Constellation Brands, Inc. (NYSE: STZ and
STZ.B) is a S&P 500 Index and a Fortune 1000® company with 4,400 employees,
sales in 125 countries and operations in 40 facilities worldwide. The company
manages a broad portfolio of more than 100 wines, beers and spirits that
include: Robert Mondavi, Clos du Bois, Kim Crawford, Inniskillin, Franciscan
Estate, Ruffino, Simi, Estancia, Corona Extra, Black Velvet Canadian Whisky and
SVEDKA Vodka. Learn more at www.cbrands.com.
Forward-Looking Statements
This news release contains forward-looking statements. The words "expect,"
"anticipate," and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain such identifying
words. Those statements may relate to Constellation Brands' business strategy,
future operations, prospects, plans and objectives of management, as well as
information concerning expected actions of third parties. All forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by the forward-looking
statements. All forward-looking statements speak only as of the date of this
news release. Constellation Brands undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events, or otherwise.
The forward-looking statements are based on management's current expectations
and, unless otherwise noted, do not take into account the impact of any future
acquisition, merger or any other business combination, divestiture,
restructuring or other strategic business realignments, financing or share
repurchase that may be completed after the date of this release. The forward-
looking statements should not be construed in any manner as a guarantee that
such results will in fact occur. There can be no assurance that the transaction
between Constellation Brands and Anheuser-Busch InBev SA/NV regarding the
purchase by Constellation Brands of the 50% portion of Crown Imports LLC which
it does not already own will occur or will occur on the timetable contemplated
hereby.
In addition to the risks and uncertainties of ordinary business operations, the
forward-looking statements of the company contained in this news release are
subject to a number of risks and uncertainties, including:
* completion of the announced transaction regarding the purchase by
Constellation Brands of the 50% interest in Crown Imports LLC which it does
not already own, and the accuracy of all projections which are expected to
impact the company's financial profile;
* the exact elements of permanent financing for the acquisition of the
remaining interest in Crown Imports LLC will depend upon market conditions;
* the exact duration of the share repurchase implementation and the amount and
timing of any share repurchases;
* ability to achieve expected and target debt leverage ratios due to different
financial results from those anticipated and the timeframe in which the
target debt leverage ratio will be achieved will depend upon actual
financial performance;
* increased competitive activities in the form of pricing, advertising and
promotions could adversely impact consumer demand for the company's products
and/or result in lower than expected sales or higher than expected expenses;
* general economic, geo-political and regulatory conditions, prolonged
downturn in the economic markets in the U.S. and in the company's major
markets outside of the U.S., continuing instability in world financial
markets, or unanticipated environmental liabilities and costs; and
* other factors and uncertainties disclosed in the company's filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K
for the fiscal year ended Feb. 29, 2012, which could cause actual future
performance to differ from current expectations.
CONTACTS
Media
Angela Howland Blackwell - 585-678-7141
Cheryl Gossin - 585-678-7191
Investor Relations
Patty Yahn-Urlaub - 585-678-7483
Bob Czudak - 585-678-7170
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Constellation Brands Inc via Thomson Reuters ONE
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