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CONSTELLATION
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Lisa
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Constellation
Brands Proposes
To
Acquire Vincor International
For
C$31.00 (US$26.45) Per Share In Cash
Provides
39% Premium to Vincor Shareholders
Transaction
Valued at C$1.4 (US$1.2) Billion
FAIRPORT,
N.Y., Sept. 27, 2005 - Constellation Brands, Inc. (NYSE: STZ, ASX:
CBR), today announced that it has made a proposal to the Board of Directors
of
Vincor International Inc. (TSX: VN) of Mississauga, Ontario offering to purchase
all of the outstanding common shares of Vincor for C$31.00 (US$26.45) per
share
in cash in a negotiated transaction. Constellation’s proposal represents a
premium of approximately 39% over Vincor’s closing share price on Sept. 8, 2005,
the day before Constellation first submitted its proposal.
The
transaction is
valued at approximately C$1.4 (US$1.2) billion, which includes approximately
C$1.1 (US$0.9) billion of equity and the assumption of approximately C$305
(US$260) million of Vincor’s net debt as disclosed in the company’s latest
public filing dated June 30, 2005.
“We
are
disappointed that the Vincor Board has refused to engage in meaningful
discussions with Constellation regarding our premium proposal. This transaction
is a unique opportunity for Vincor and its shareholders to receive a significant
cash premium for their shares despite the very difficult operating conditions
Vincor faces in markets such as the U.S., the U.K. and Australia where it
lacks
scale,” said Constellation Brands Chairman and Chief Executive Officer Richard
Sands. “Acceptance of our proposal by the Vincor Board would provide Vincor’s
shareholders with an immediate cash premium far greater than we believe the
company can deliver on its own, given today's increasingly competitive and
consolidating global wine industry.”
“Our
proposal is
based on publicly available information about Vincor; however, should
discussions with Vincor demonstrate that additional value is warranted,
Constellation would be willing to offer a higher price. This initiative is
a
high priority for us, and we are committed to making this combination a reality.
We are prepared to begin substantive discussions with Vincor immediately
to
negotiate a mutually acceptable transaction based on our all-cash premium
proposal. Given the significant benefits and the opportunities created by
this
combination for both companies, we are confident that Vincor’s shareholders will
find our proposal very attractive and enthusiastically support it,” Sands
said.
“Constellation
has a proven record of working successfully with management of acquired
companies. We respect the talent and experience of Vincor’s management team, led
by Donald Triggs, and its success in making Vincor the preeminent Canadian
wine
company,” stated Sands. “It is our desire, and in our best interests, to retain
top talent and we believe there will be increased opportunities for Vincor
employees as part of our larger, global organization. We appreciate Vincor’s
strong Canadian heritage and its commitment to the communities in which it
operates,” he concluded.
Constellation
noted that its Board of Directors unanimously supports this proposal.
Constellation’s proposal is not conditional on financing and would be subject to
customary closing conditions. Constellation has received commitments for
an
all-debt financing that would be sufficient to consummate the transaction.
Vincor
has wineries throughout Canada in British Columbia, Ontario, Quebec and New
Brunswick. In addition, Vincor has small operations in the U.S., Western
Australia and New Zealand, and is an importer, marketer and distributor in
the
U.K. Vincor’s premium brands include Inniskillin, Jackson-Triggs, R.H. Phillips,
Toasted Head, Hogue, Goundrey, Amberley, Sumac Ridge, Hawthorne Mountain,
Kim
Crawford, Kumala, Ancient Coast and Sawmill Creek. Vincor’s popular priced wines
include Entre-Lacs, L’Ambiance, Sola Nero and Notre Vin Maison.
Below
is the full text of the letter delivered today, Sept. 27, 2005 to Mark L.
Hilson, Chairman of the Board of Vincor and Donald L. Triggs, President and
CEO
of Vincor:
September
27,
2005
Mr.
Mark
L.
Hilson
Chairman
of the Board
c/o
Onex
Corporation
161
Bay
Street
P.O.
Box 700
Toronto,
Ontario M5J 2S1
Mr.
Donald
L. Triggs
President
and CEO
Vincor
International Inc.
441
Courtneypark Drive East
Mississauga,
Ontario L5T 2V3
Dear Mark and Don:
As
discussed with Don
during
our meeting on September 9, 2005 and with both of you by phone on September
23rd,
2005,
I believe a combination of Constellation Brands, Inc (“Constellation”) and
Vincor International Inc. (“Vincor”) will be of great benefit to our respective
shareholders, employees, business partners and other constituencies. We are,
however, disappointed by your rejection in our meeting today of our proposal
to
acquire Vincor and your Board’s refusal to engage in discussions on this matter.
Following
substantial review and consideration, the Constellation Board of Directors
and
senior executives have concluded that the benefits to both our companies’
shareholders and customers are simply too compelling to ignore. Our strong
preference is to work together with Vincor to agree to a negotiated transaction.
However, your refusal to investigate this opportunity after our earlier meeting
and discussions dating back to September 9, 2005,
make clear the need for us to consider all of our options.
For
these reasons, Constellation is prepared to make public its earlier offer
to
enter into a negotiated transaction, to acquire for cash all of the outstanding
common shares of Vincor at a price of C$31.00 per share. This price represents
a
premium of 39.1% over
the closing market price of C$22.29 on September 8, 2005, the last day before
we
first approached you with our proposal.
Our
proposal is made solely on the basis of publicly available information. Our
preference is to engage in a brief and non-intrusive diligence process, subject
to the terms of a confidentiality agreement, in order to deepen our knowledge
of
your company. Should our review demonstrate that additional value for Vincor
is
warranted, we would be willing to offer a higher price. All required resources
needed to complete this process expeditiously and to negotiate the terms
of a
transaction which your Board of Directors could support before October 14,
2005
are available immediately.
The
corporate values and cultures of our two companies are remarkably similar.
Yours
stemming from a strong Canadian heritage and ours from a family run business
in
nearby upstate New York. Notwithstanding our humble beginnings, we both share
the goal of being leaders in the global wine market. However, the challenges
of
operating in today’s market pose certain risks. Constellation is uniquely
positioned to enhance this vision, especially from a shareholder value
perspective, and we believe our all-cash premium proposal is far superior
in
terms of value and certainty to Vincor’s medium term opportunities.
We
have
a proven record of working successfully with management of acquired companies,
including BRL Hardy and Robert Mondavi. We conduct our operations in an
integrated, yet decentralized manner allowing each unit to benefit from the
combined company’s leverage and scale while maintaining its distinct culture. We
respect the talent and experience of Vincor management and admire your
accomplishments. It is our desire and in our best interests to retain top
talent, and consistent with our decentralized philosophy, it has been our
practice to continue operations in their original locations. We appreciate
Vincor’s strong Canadian heritage and its commitment to the
community.
Our
Board of Directors has unanimously authorized a transaction with Vincor and
we
have received financing commitments that would be sufficient to consummate
the
transaction. Our proposal is not subject to any unusual governmental or third
party approvals, nor do we foresee any significant obstacles to the conclusion
of a transaction. Constellation has retained Citigroup Corporate and Investment
Banking and Osler, Hoskin & Harcourt LLP to assist us in this transaction.
We are well advised and knowledgeable regarding all of our options.
We
are
convinced that the proposed combination of our two companies will bring
significant value to our respective constituencies. Our desire is to enter
into
discussions immediately and we remain hopeful that on further reflection
together with Vincor’s other directors you and the entire Vincor Board of
Directors will see the merit in this approach. We request a reply to this
proposal no later than 5:00 PM ET on September 27,2005.
Sincerely,
Richard
Sands
Chairman
of the Board
and
Chief Executive Officer
Constellation
Brands, Inc
About
Constellation
Constellation
Brands, Inc, is a leading international producer and marketer of beverage
alcohol brands with a broad portfolio across the wine, spirits and imported
beer
categories. Well-known brands in Constellation’s portfolio include: Corona
Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl,
Tsingtao, Black Velvet, Fleischmann’s, Mr. Boston, Paul Masson Grande Amber
Brandy, Chi-Chi’s, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells,
Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi,
Hardys,
Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone,
Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi
Winery
brands. For additional information about Constellation, as well as its product
portfolio, visit the company’s Web site at www.cbrands.com.
Investor/Media/Public
Conference Call
A
conference call to discuss the
proposed acquisition is scheduled on Wednesday, Sept. 28, 2005 at 9:00 a.m.
(Eastern). The conference call can be accessed by dialing (866) 831-6267
(U.S.
dial-in) or (617) 213-8857 (international dial-in) beginning 10 minutes prior
to
the start of the call. A live listen-only web cast of the conference call,
together with a copy of this media release, are available on the Internet
at
Constellation’s web site: www.cbrands.com under “Investors.”
Forward
Looking Statement
This
press release contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are subject to a number of risks and uncertainties,
many of which are beyond Constellation’s control, that could cause actual
results to differ materially from those set forth in, or implied by, such
forward-looking statements. All statements other than statements of historical
facts included in this press release are forward-looking statements. All
forward-looking statements speak only as of the date of this press release.
Constellation undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
There can be no guarantee that any transaction between Constellation and
Vincor
will occur. In addition to the risks and uncertainties of ordinary business
operations, the forward-looking statements of Constellation contained in
this
press release are also subject to the following risks and uncertainties:
Constellation achieving certain sales projections and meeting certain cost
targets; wholesalers and retailers may give higher priority to products of
Constellation’s competitors; raw material supply, production or shipment
difficulties could adversely affect Constellation’s ability to supply its
customers; increased competitive activities in the form of pricing, advertising
and promotions could adversely impact consumer demand for Constellation’s
products and/or result in higher than expected selling, general and
administrative expenses; a general decline in alcohol consumption; increases
in
excise and other taxes on beverage alcohol products; and changes in foreign
currency exchange rates. For additional information about risks and
uncertainties that could adversely affect Constellation’s forward-looking
statements, please refer to Constellation’s Annual Report on Form 10-K for the
fiscal year ended February 28, 2005 and Constellation’s Quarterly Report on Form
10-Q for the fiscal quarter ended May 31,
2005.