Winemaker Vincor unmoved by giant’s ‘final’ takeover bid
Constellation raises offer to $33 per share Analysts believe a better deal remains in reach
Vincor International Inc. is “ encouraged” by a sweetened $ 1.48billion takeover offer by Constellation Brands but says the U. S. liquor giant must uncork a better deal if it wants insider details about Canada’s largest winemaker.
Just hours before its original offer was set to expire yesterday, Constellation unveiled a “ final” $ 33- per- share offer after revealing that Vincor had rejected an even higher price of $ 35- a- share last week. That prompted analysts to speculate that a better deal remained in reach for the two firms. “We have consistently said that we would provide Constellation with access to non- public information if it was prepared to formally put an acceptable price on the table,” said Mark Hilson, chair of Vincor’s special committee of independent directors.
“ On numerous occasions Constellation has indicated to Vincor and Vincor shareholders that it is prepared to pay a price of $36 or higher if it is granted access to non- public information.”
Constellation CEO Richard Sands said he will not go that high, adding his company has been unable to negotiate a friendly transaction with Vincor’s board of directors. He pointed to Vincor’s rejection last Friday of a fresh $ 35per- share offer that he said was contingent on access to insider information to justify a higher price. “ In the absence of co- operation by Vincor, $33 is Constellation’s best and final offer,” Sands said.
“ We remain hopeful that Vincor’s board will reconsider its position and offer its support and co- operation, in addition to confirmatory due diligence, so that a $ 35- per- share cash offer can be made.” The new $ 33- a- share bid provides a 48 per cent premium above the closing price of Vincor’s common shares on the Toronto Stock Exchange on Sept. 8. That was the day before Constellation first proposed an acquisition. The offer, which also includes debt, will expire at midnight Dec. 8.
Last call for Constellation’s original offer of $ 31- a- share had been set for yesterday at 5 p. m.
Analysts, however, continued to raise the possibility of a higher deal.
“ From a fundamental perspective, we remain positive on the acquisition,” U.S.-based Goldman Sachs said in a brief research note to clients. Goldman Sachs added that it could result in an offer 10 cents a share higher, even at those high price points.
“ This could result in nearly 20 per cent average EPS ( earnings per share) growth over the next two years when combined with STZ’s strong organic sales outlook.” Vincor is North America’s fourth-largest wine producer with 2,000 employees in North America, Australia, New Zealand and South Africa.
Its brands include Inniskillin, Jackson- Triggs, R. H. Phillips, Amberley, Kim Crawford, EntreLacs and L’Ambiance.
Constellation’s portfolio includes Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao and Black Velvet.
Vincor’s shares gained 55 cents, or 1.61 per cent, to close at $ 34.65 yesterday on the Toronto Stock Exchange.