Constellation Brands, Inc. (NYSE: STZ) said in a press release it reached an agreement to sell its Black Velvet Canadian Whisky brand as part of an ongoing "premiumization strategy."
Constellation Brands agreed to sell the Black Velvet Canadian Whisky and associated production facilities in Alberta, Canada to Heaven Hill Brands for $266 million. The deal also includes a subset of Canadian whiskey brands, which are produced at the same Alberta facility.
Total net sales of all brands included in the transaction were $67 million during fiscal 2019, the company said. The price tag on the deal represents a multiple of gross profit after marketing of around eight to nine times.
Constellation's motivation to shed smaller assets is consistent with management's desire to focus exclusively on premium brands to better deliver accelerated growth and shareholder value, the company said.
"We are relentlessly focused on the consumer and building a portfolio of brands consumers love today, while pushing beyond to meet their evolving needs well into the future," said Bill Newlands, Constellation Brands president and CEO.
Heaven Hill is acquiring a high-volume brand that aligns with its business objectives and complements its broad spirits portfolio, Newlands also said.
Constellation's asset sale to Heaven Hill remains subject to regulatory approvals and is expected to close by the end of 2019.
Constellation's stock closed Monday at $193.05 per share.
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