Wine Appreciation Course
Source: The Courier-Mail

DESPITE pulling out of Australia, Constellation Brands will consider buying Treasury Wine Estates.

Constellation’s chief executive Rob Sands said in an interview this week that if it becomes an opportunity and the business is for sale, then it would look at it.

The United States-based Constellation Brands sold 80 per cent of the Reynella-based Constellation Wines, formerly BRL Hardy, for $230 million cash to Sydney private equity firm CHAMP on February 1.

The sale came just eight years after Constellation bought the ASX-listed BRL Hardy for $1.9 billion in 2003, but incurred a series of write-downs due to the industry’s over-production issues and falling global demand.

Mr Sands said there were elements of Treasury which it thought were strong and elements that might not be, but he noted that Treasury was not for sale.

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Treasury was spun out of the Foster’s Group and listed on the Australian Securities Exchange on May 9.

A spokesman for Treasury declined to comment on the Constellation remarks.

Mr Sands said he was not terribly worried about a rival acquiring Treasury because there were no other wine companies of the size needed to pull such a deal off, while spirits companies were more focused on spirits.

He said while private equity firms had invested in the wine industry, there may not be enough cost savings to wring out of Treasury to make it worthwhile for such a buyer.

“I think acquisitions will come back on our radar screen if good opportunities present themselves,” Mr Sands said.

Treasury shares closed down five cents at $3.50 yesterday.