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World's biggest winery uncorked
By Alex Frew McMillan
ADELAIDE, Australia (CNN) -- Stock in Australian wine company BRL Hardy Ltd. jumped on Monday after it agreed to be taken over by U.S.-based Constellation Brands. The A$1.9 billion ($1.1 billion) takeover will create the world's largest wine company, with some $1.7 billion in sales. That surpasses current market leader E&J Gallo Winery. BRL Hardy stock leaped 10.81 percent to close at A$10.46 on Monday, with mergers explaining the 0.13 percent climb in the benchmark S&P/ASX 200 index on a day most Asia Pacific markets lost ground. Its shares were frozen on Friday pending announcement of the deal. New York state-based Constellation gets around 41 percent of its $2.4 billion in annual sales from wines, with vineyards such as Inglenook and Arbor Mist. Listing in AustraliaConstellation is now paying A$10.50 per share for BRL Hardy. They already have a 50-50 joint venture called Pacific Wine Partners to sell BRL Hardy's wines in the United States. (Talks begin) BRL Hardy, based in the Adelaide suburb of Reynella, has around 20 percent of the Australian wine market, with brands such as Banrock Station, Leasingham and Hardys. Constellation makes and distributes around 200 brands in the United States and the United Kingdom. Besides wine, it imports beers such as Corona and Tsingtao. It was previously the world's second-biggest wine producer. The merger will boost its total sales to around $3.2 billion. Privately owned Gallo has total sales of around $1.4 billion. Constellation estimates it can get savings of around $17 million out of the deal, partly by shifting some production to Australia and consolidating bottling operations. Constellation is offering BRL Hardy shareholders their choice of cash, stock or a mix of both. It expects the deal to close in April and is planning to list its shares in Australia.
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