Constellation Brands (NYSE:STZ) said on Wednesday it would sell about 30 of its low-end wine and spirits brands to E. & J. Gallo Winery for $1.7 billion, as the Corona beer maker focuses on more profitable brands.
In early February, the brewer said it was looking to sell some of its low-end wine brands, as it doubles down on more profitable high-end segment and shift towards beer and cannabis products that target a younger demographic.
The deal primarily includes Constellation's brands priced at or below $11 a bottle such as Clos du Bois, Ravenswood and Mark West and the related facilities. The company expects the deal to close at the end of the first quarter of fiscal 2020.
Constellation retains a host of brands including Robert Mondavi, Meiomi and Kim Crawford.
In 2016, the company divested its Canadian wine business to Ontario Teachers' Pension Plan for about $1.03 billion Canadian ($772 million U.S.)
The company also announced earnings for its fourth quarter mid-morning Thursday, in which it reported net sales of $1.797 billion, and $465 million in operating income.
STZ achieved full-year EPS of $17.57, up 53%, and comparable basis EPS of $9.28, ahead 7%. The company generated record operating cash flow of more than $2.2 billion and $1.4 billion of free cash flow for fiscal 2019
As for its 2020 outlook, the company expects reported basis EPS of $8.47 - $8.77 and comparable basis EPS of $8.50 - $8.80, including impact of the wine and spirits divestiture.
Shares galloped $4.09, or 2.3%, to $183.78
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