One of the leading producers and distributors of premium alcoholic beverages in the world Brown-Forman Corporation (BF.B), in its streak to optimize shareholders' return, has agreed to sell its Hopland, California based wine asset, Fetzer Vineyards to Vina Concha y Toro S.A., a Chilean wine producer for $238.0 million.
The sale includes its bottling facility, Fetzer wine, Fetzer brand and other California-based wines and excludes its super-premium Sonoma-Cutrer brand. Moreover, its long-term agency relationship with Korbel California Champagnes will remain unchanged.
Under the financial advisory of Rabo Securities USA Inc., management expects to close the deal by April 2011. Through this deal, management expects to increase its fiscal 2011 earnings between 20 cents and 30 cents. The deal will help Brown-Forman to concentrate on its best growth prospects. Further, the company wants to focus on those markets, which offer strong growth prospect and high returns.
Fetzer was selling around two million cases annually before it was acquired by Brown-Forman in 1992. In calendar year 2010, Fetzer sold more than three million cases. Brown-Forman's Fetzer assets contributed $156.0 million to its net sales in fiscal 2010.
Earlier in December 2010, Brown-Forman announced that it was looking for possible alternatives including sale of its California based asset. At present, Brown-Forman has considered selling the business for the best interest of the company's shareholders.
Brown-Forman always looks for alternatives for enhancing shareholders' wealth. The company has a consistent track record of returning cash to shareholders in the form of regular dividend payments. Brown-Forman has paid regular quarterly cash dividends consecutively for the past 64 years and has increased the same for the last 26 years. Also, in December 2010, the company completed its $250 million share repurchase program.
Brown-Forman Corp. is one of the leading producers and distributors of premium alcoholic beverages in the world. The company has a strong portfolio of 29 brands, including Jack Daniel's, the flagship spirits brand, followed by Southern Comfort liqueur, Canadian Mist whiskey, Finlandia vodka as well as Fetzer and Korbel wine brands. Brown-Forman markets its products in more than 135 countries including the U.S., the U.K., Australia, Mexico, Poland, Germany, France, Spain, Italy, South Africa, China, Japan, Canada, and the Russian Federation. The Louisville, Kentucky-based company also has 16 production and warehousing facilities spread across the U.S., Europe and Mexico.
128 years old Vina Concha y Toro S.A. is a leading producer and distributor of wine in Latin America. The company exports its wide range of brand portfolio to 135 countries. The company produces high quality of wine through its own vineyards spread in 9,500 hectares.
Brown-Forman, which competes with Constellation Brands Inc. (STZ) and Diageo plc (DEO), currently holds a Zacks #2 Rank, implying a short-term 'Buy' rating on the stock. Besides, the company retains a long-term Outperform recommendation on the stock.