LOUISVILLE, Ky.--(BUSINESS WIRE)--
Brown-Forman Corporation (NYSE: BFA)(NYSE: BFB) announced today that the
company has completed the strategic review of its Hopland,
California-based wine assets. As a result, Brown-Forman has agreed to
sell Fetzer Vineyards to Chilean wine producer Viña Concha y Toro S.A.
for $238 million.
Brown-Forman acquired Fetzer in 1992 from the Fetzer family. At the time
of acquisition, the Fetzer company was selling nearly two million cases
annually. Under Brown-Forman’s stewardship, Fetzer’s depletions grew to
more than three million cases in calendar year 2010. Founded in 1968,
Fetzer has been recognized consistently as a leader in varietal wine
development, sustainable agriculture, and as an environmental leader.
Included in this sale of Fetzer Vineyards are the Fetzer winery,
bottling facility, and vineyards, as well as the Fetzer brand and other
Hopland, California-based wines, including Bonterra, Little Black Dress,
Jekel, Five Rivers, Bel Arbor, Coldwater Creek, and Sanctuary. Also
included in the sale is a facility in Paso Robles, California. The
fiscal 2010 net sales contribution from these assets was $156 million,
including excise taxes. The key facilities are located in Hopland,
California and employ approximately 240 people. The sale does not
include the super-premium Sonoma-Cutrer brand or the company’s long-term
agency relationship with Korbel California Champagnes.
In December, Brown-Forman announced it was exploring strategic
alternatives for the Hopland, California-based wine assets, including a
possible sale. During this process, the company considered a range of
alternatives but ultimately concluded that selling the business was in
the best interest of Brown-Forman shareholders.
“Brown-Forman and our partners have done a great job with these brands
over the years, but as our company has grown globally and our portfolio
strategy has evolved, we concluded that our company and our shareholders
are best served by redirecting our resources to those opportunities
around the world which offer stronger growth and higher returns on
invested capital,” said Brown-Forman Chief Executive Officer Paul Varga.
“This will also enable us to more fully focus on our best growth
prospects in our most important market, the United States.”
The sale of Fetzer Vineyards is expected to close in April 2011 and
projected to increase fiscal 2011 earnings per share in the range of
$0.20 - $0.30. This transaction is subject to regulatory clearance in
the U.S. and customary closing conditions. The company plans to discuss
this transaction further during its fiscal 2011, third quarter earnings
call on March 8, 2011.
Rabo Securities USA, Inc. and Rothschild acted as financial advisors to
Brown-Forman in this transaction. Pillsbury Winthrop Shaw Pittman LLP
and Stoll Keenon Ogden PLLC acted as legal advisors.
Founded in 1883, Viña Concha y Toro S.A. is Latin America’s leading
producer and occupies an outstanding position among the world’s most
important wine companies, currently exporting to 135 countries
worldwide. Uniquely, it owns around 9,500 hectares of prime vineyards,
which allows the company to secure the highest quality grapes for its
wine production. Concha y Toro’s portfolio includes a wide range of
successful brands at every price point, from the top of the range Don
Melchor and Almaviva to the flagship brand Casillero del Diablo and
innovative stand-alone brands such as Palo Alto and Maycas del Limarí.
For 140 years, Brown-Forman Corporation has enriched the experience of
life by responsibly building fine quality beverage alcohol brands,
including Jack Daniel’s Tennessee Whiskey, Southern Comfort, Finlandia,
Jack Daniel’s & Cola, Canadian Mist, Fetzer, Korbel, Gentleman Jack, el
Jimador, Tequila Herradura, Sonoma-Cutrer, Chambord, New Mix, Tuaca,
Woodford Reserve, and Bonterra. Brown-Forman’s brands are supported by
nearly 4,000 employees and sold in approximately 135 countries
worldwide. For more information about the company, please visit http://www.brown-forman.com/.
Important Information on Forward-Looking Statements:
This report contains statements, estimates, and projections that are
“forward-looking statements” as defined under U.S. federal securities
laws. Words such as “aim,” “anticipate,” “aspire,” “believe,”
“envision,” “estimate,” “expect,” “expectation,” “intend,” “may,”
“potential,” “project,” “pursue,” “see,” “will,” “will continue,” and
similar words identify forward-looking statements, which speak only as
of the date we make them. Except as required by law, we do not intend to
update or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise. By their nature,
forward-looking statements involve risks, uncertainties and other
factors (many beyond our control) that could cause our actual results to
differ materially from our historical experience or from our current
expectations or projections. These risks and other factors include, but
are not limited to:
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continuing or additional pressure on economic conditions in major
markets or political, financial, or equity market turmoil (and related
credit and capital market instability and illiquidity); high
unemployment; supplier, customer or consumer credit or other financial
problems; inventory fluctuations at distributors, wholesalers, or
retailers; bank failures or governmental nationalizations; etc.
-
successful development and implementation of effective business and
brand strategies and innovations, including distribution, marketing,
promotional activity, favorable trade and consumer reaction to our
product line extensions, formulation, and packaging changes
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competitors’ pricing actions (including price reductions, promotions,
discounting, couponing or free goods), marketing, product
introductions, or other competitive activities
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prolonged continuation or acceleration of the declines in consumer
confidence or spending, whether related to economic conditions (such
as austerity measures or tax increases), wars, natural or other
disasters, weather, pandemics, security concerns, terrorist attacks or
other factors
-
changes in tax rates (including excise, sales, VAT, corporate,
individual income, dividends, capital gains) or in related reserves,
changes in tax rules (e.g., LIFO, foreign income deferral, U.S.
manufacturing and other deductions) or accounting standards, tariffs,
or other restrictions affecting beverage alcohol, and the
unpredictability and suddenness with which they can occur
-
trade or consumer resistance to price increases in our products
-
tighter governmental restrictions on our ability to produce, import,
sell, price, or market our products, including advertising and
promotion; regulatory compliance costs
-
business disruption, decline or costs related to reductions in
workforce or other cost-cutting measures
-
lower returns and discount rates related to pension assets, higher
interest rates, or significant fluctuations in inflation rates;
deflation
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fluctuations in the U.S. dollar against foreign currencies, especially
the euro, British pound, Australian dollar, or Polish zloty
-
changes in consumer behavior and our ability to anticipate and respond
to them, including reduction of bar, restaurant, hotel or other
on-premise business; shifts to discount store purchases or shifts away
from premium-priced products; other price-sensitive consumer behavior;
or reductions in travel
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changes in consumer preferences, societal attitudes or cultural trends
that result in reduced consumption of our products
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distribution arrangement and other route-to-consumer decisions or
changes that affect the timing of our sales, temporarily disrupt the
marketing or sale of our products, or result in implementation-related
costs
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adverse impacts resulting from our acquisitions, dispositions, joint
ventures, business partnerships, or portfolio strategies
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lower profits, due to factors such as fewer used barrel sales, lower
production volumes (either for our own brands or for those of third
parties), sales mix shift toward lower priced or lower margin skus, or
cost increases in energy or raw materials, such as grapes, grain,
agave, wood, glass, plastic, or closures
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climate changes, agricultural uncertainties, environmental calamities,
our suppliers’ financial hardships or other factors that affect the
availability, price, or quality of grapes, agave, grain, glass,
energy, closures, plastic, or wood
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negative publicity related to our company, brands, personnel,
operations, business performance or prospects
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product counterfeiting, tampering, contamination, or recalls and
resulting negative effects on our sales, brand equity, or corporate
reputation
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significant costs or other adverse developments stemming from
litigation or governmental investigations of beverage alcohol industry
business, trade, or marketing practices by us, our importers,
distributors, or retailers
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impairment in the recorded value of any assets, including receivables,
inventory, fixed assets, goodwill or other intangibles
Source: Brown-Forman Corporation
Contact:
Brown-Forman Corporation
Ben Marmor, 502-774-6691
Assistant
Vice President
Director Investor Relations
or
Phil Lynch,
502-774-7928
Vice President
Director Corporate Communications
and Public Relations