Business Context and Reporting Period
Company: Constellation Brands, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 17, 2007
Event: Completion of the acquisition of the Fortune Brands, Inc. wine business in the United States.
Key Financial Metrics
- Acquisition Price: Approximately $885 million in cash (subject to purchase price adjustments).
- Transaction Structure: Cash and debt-free basis.
- Financing Sources:
- Net proceeds from the sale of $500 million aggregate principal amount of 8 3/8% Senior Notes due 2014 (sold December 5, 2007).
- Borrowings under the revolving portion of the Credit Agreement dated June 5, 2006.
- Revenue/Profit/Cash Flow: The filing text does not provide specific revenue, profit, or cash flow figures for the acquired business or the combined entity.
Material Changes
Constellation Brands completed the acquisition of Beam Wine Estates, Inc. ("BWE") and its subsidiaries from a wholly-owned subsidiary of Fortune Brands, Inc. This transaction adds the United States wine portfolio of Fortune Brands to Constellation's holdings. The acquired portfolio includes:
- Atlas Peak Vineyards, Inc.
- Buena Vista Winery, Inc.
- Clos du Bois Wines, Inc.
- Gary Farrell Wines, Inc.
- Peak Wines International, Inc.
- Certain wineries, vineyards, or interests therein in the State of California.
Guidance, Outlook, and Risks
Management Commentary: The acquisition was executed pursuant to a Stock Purchase Agreement dated November 9, 2007. The transaction was completed through Constellation's wholly-owned subsidiary, Constellation Wines U.S., Inc. ("CWUS").
Risks and Contingencies: The purchase price is subject to certain adjustments. The filing notes that information in the attached news release is "furnished" and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.
Pro Forma Information: Not applicable in this filing.
Investor Verification Checklist
- Verify the final purchase price after applicable adjustments to the $885 million base figure.
- Review the terms of the $500 million Senior Notes due 2014 issued on December 5, 2007.
- Assess the impact of the new debt load on Constellation's overall leverage ratios.
- Examine the specific assets and liabilities transferred within the BWE subsidiaries.
- Review the full text of the news release (Exhibit 99.1) for additional strategic context not detailed in the 8-K body.