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Sazerac buys Paul Masson brandy for $255m

Constellation Brands has signed an agreement with Buffalo Trace owner Sazerac to sell Paul Masson Grande Amber Brandy for approximately US$255 million.

Paul Masson is one of the world’s largest brandy brands, selling two million cases

The deal, which is subject to certain purchase price and closing alterations, is expected to close in the second quarter of fiscal 2021. The agreement also requires a review and clearance from government body the Federal Trade Commission (FTC).

US firm Constellation Brands originally intended to sell Paul Masson as part of a US$1.7 billion agreement to offload 30 drinks brands to E&J Gallo Winery. However, the deal was altered in December 2019 following “competitive concerns” from the FTC.

The deal, which mostly related to Constellation’s wine portfolio, was revised to exclude Paul Masson brandy, Cook’s California Champagne and J Roget American Champagne from the sale. This resulted in an altered transaction price of around US$1.1bn, of which US$250m is “an earn-out if brand performance provisions are met over a two-year period after closing”.

Combined, these excluded brands sell about five million cases annually. Paul Masson is one of the world’s largest brandy brands, selling two million cases.

In addition, Constellation has agreed to sell its Nobilo wine brand to E&J Gallo Winery for US$130m, subject to FTC approval.

“These agreements represent another step forward in our efforts to transform our wine and spirits business,” said Bill Newlands, president and chief executive officer at Constellation Brands.

“Thanks to the continued hard work of our Constellation team members, together with our distributor and retailer partners, our strategy continues to gain momentum. We look forward to closing these transactions in the coming months.”

Constellation Brands will provide additional commentary on the two transactions during a conference call on 1 July for its first quarter fiscal 2021 results.

Sazerac also recently acquired a number of brands from Woodford Reserve owner Brown-Forman, including Canadian whisky Canadian Mist and American whiskey Early Times.

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