BRL Hardy accepts $2b to form world's biggest vintner

By SIMON HENDERY liquor writer

BRL Hardy, Australia's third-largest winemaker and owner of New Zealand's Nobilo Wine Group, has accepted a A$1.9 billion ($2.07 billion) bid from US spirits group Constellation Brands, which will create the world's largest wine company.

The bid values BRL shares at A$10.50 or a 37 per cent premium on their price on Monday, when the two companies announced they were holding merger talks.

Under the deal, BRL shareholders will be offered cash, scrip, or a combination of both for their shares.

BRL chairman John Pendrigh said his board unanimously recommended shareholders to support the merger, in the absence of a higher offer. Under the proposal, the BRL Hardy and Constellation Brands wine operations would be combined to form a separate global wine business - Constellation Wines - within the Constellation Brands group.

BRL's founding managing director, Stephen Millar, who will become Constellation Wines chief executive based in Adelaide, said BRL and Constellation had achieved strong growth and the combined operation could bring even greater success.

"The A$1.9 billion value placed on BRL Hardy by today's merger announcement compares with a market value of around $90 million when the company was formed 10 years ago," Millar said.

The two companies' combined operations would generate annual sales of about A$3 billion, making Constellation Wines the world's largest wine business.

BRL and Constellation have been working together since 200,1 when they formed a joint venture, Pacific Wine Partners, which markets BRL wines in the United States.

The merger is likely to open further export doors for the Nobilo Wine Group, New Zealand's second-biggest wine-maker behind Montana.

Nobilo's managing director, Brian Vieceli, could not be reached for comment last night, but the company is part through a $100 million expansion programme which is expected to increase production from just under 10 million bottles of wine last year to almost 20 million by 2008.

Constellation chairman and chief executive Richard Sands said this week that a merger would give the combined companies a strong international wine portfolio to market worldwide, with an emphasis on the fast-growing New World category of wines from the US, Australia, New Zealand and Chile.

BRL took full control of Nobilo - whose key brands include Nobilo, Selaks and Drylands - in 2000.

BRL says it has about 24 per cent of the Australian market.