Constellation Brands Inc, the world's biggest winemaker, is selling 80 per cent of its operations in Australia, the UK and South Africa to Australian private equity firm Champ Private Equity, for A$230 million ($230 million), in abid to reduce its net borrowings.
New York-based Constellation, which has grown through internal expansion and by acquisitions, is selling virtually all its wineries, facilities, vineyards in Australia, the UK, and South African brands, but will retain a 20 per cent stake in the operations.
Included in the sale is also its 50 per cent interest in Matthew Clark, a UK wholesale joint venture.
Constellation, which became Australia's largest winemaker following its 2003 takeover of BRL Hardy for $1.1 billion, is selling some of Australia's most well known wine brands that include Hardys, Chateau Reynella, Tintara, Leasingham, Stonehaven, Banrock, Berri Estates, Renmano and Omni.
In the UK sale, its brands include the country's prominent brand Stowell and Echo Falls, while South African labels include Flagstone, Kumala and Fish Hoek.
Constellation's CEO Rob Sands said that the Australian and UK operations are "no longer consistent with Constellation's strategy," and the wine maker expects to use the proceeds from the sale to reduce borrowings.
The sale will see Constellation lose its position as the world's largest wine producer and would be ranked at the second spot behind California-based E. & J. Gallo Winery.