Constellation Brands Reports Wine Deal, Upbeat Results
April 06 2016 - 9:20AM
Dow Jones News
Constellation Brands Inc. on Wednesday said it agreed to acquire
the Prisoner Wine Co. portfolio of brands from Huneeus Vintners and
is weighing a spinoff of its Canadian wine business.
The company also posted better-than-expected results for its
final quarter and gave upbeat guidance for the current year as
acquisitions continue to provide a boon for the beer and wine
distributor.
Shares added 3.9% to $157.25 in premarket trading. Constellation
also raised its dividend 29% to 40 cents a share.
Constellation became the third-largest beer company by volume in
the U.S. in 2013 after acquiring rights to Corona and Modelo from
Anheuser-Busch InBev NV. In November, Constellation said it would
acquire craft-beer company Ballast Point Brewing & Spirits amid
a wider consolidation push in the beer industry.
Constellation said the expected $285 million cash deal for
Prisoner will add five "highly rated wine brands that have grown
volumes at an annual rate of 30% over the last three years."
Chief Executive Rob Sands said the acquisition will help the
company capitalize on U.S. market trends that favor high-end wine
brands while strengthening its position in the "margin enhancing
super-luxury wine category."
The deal, slated to close by the end of the month, is expected
to add 3 cents to 5 cents to the company's earnings this year.
Including the recent acquisitions of Ballast Point and
California wine brand Meiomi, as well as Prisoner, Constellation
guided for fiscal 2017 earnings of $6.05 to $6.35 a share. Analysts
forecast earnings of $6.11 a share, according to Thomson
Reuters.
Meanwhile, Constellation said it is evaluating an initial public
offering for a portion of its Canadian wine business, whose value
Mr. Sands said "is not being recognized." He said the business in
Canada delivered "excellent" financial results in fiscal 2016,
outperforming the industry and gaining market share.
"An IPO will create better visibility to this dynamic part of
the business," Mr. Sands said, adding a decision will be made later
this year.
In the latest quarter, Constellation's net beer sales rose 18%
on volume growth and favorable pricing, while sales in the wine and
spirits segment climbed 4% on a constant currency basis.
Over all for the quarter ended in February, Constellation
reported a profit of $243.4 million, or $1.19 a share, up from a
profit of $214.6 million, or $1.06 a share, a year earlier. Revenue
jumped 14% to $1.54 billion from $1.36 billion, helped by
acquisition benefits from Meiomi and Ballast Point.
Analysts surveyed by Thomson Reuters were looking for earnings
of $1.14 a share on $1.52 billion in sales.
During the fourth quarter, the company repurchased about 246,000
shares for $34 million.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 06, 2016 09:05 ET (13:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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