Fairport, NY, April 22, 1999 -- Canandaigua Brands, Inc. (Nasdaq: CBRNA and CBRNB), announced today that it has signed a definitive agreement to purchase Franciscan Estates. This acquisition, together with the pending purchase of Simi Winery in Sonoma County, positions Canandaigua as a major player in the premium wine market. The Franciscan and Simi properties will be managed together as a separate division of Canandaigua Brands. The Franciscan portfolio of wine properties includes Franciscan Oakville Estate (Napa Valley), Estancia (Monterey and Alexander Valley) and Mt. Veeder (Napa Valley); the distribution rights to Veramonte (Casablanca Valley, Chile) and Quintessa (Napa Valley); nearly 1600 acres of vineyards in the prestigious Napa Valley, Alexander Valley and Monterey appellations of California; as well as a joint venture for the Veramonte winery, brand and 1100 acre estate vineyard in Chile's premier appellation, the Casablanca Valley.
Richard Sands, President and Chief Executive Officer of Canandaigua Brands, stated, "The Franciscan, Estancia, Mt. Veeder, Veramonte and Quintessa properties are some of the most prestigious and fastest-growing in the marketplace. Together with our pending purchase of Simi Winery, the Franciscan properties will give us a major stake in the rapidly-growing premium wine market. We believe that this category will continue to grow at impressive rates in the years to come, and that estate wines - those that come from specific vineyards - will be the most sought-after by consumers. The combined Franciscan and Simi businesses will be a separate division managed by the Franciscan Estates team, independent of our other wine operations."
Mr. Sands added, "We are especially pleased that Agustin Huneeus has agreed to continue as the Vintner Chairman of Franciscan and our joint venture partner in Chile. We will retain the entire Franciscan Estates and Simi teams under the leadership of Franciscan President and CEO Jean-Michel Valette. These teams have been integral to the establishment of the properties' impressive reputations for consistent quality and artistry. Equally important, the Franciscan Estates sales and marketing organization, headed by Agustin Francisco Huneeus, will add the Simi line to their portfolio of estates."
Agustin Huneeus stated, "I am very gratified that Franciscan will be part of the Canandaigua family. The vision and resources of this very successful company will help to assure Franciscan's aggressive growth and success. Moreover, Richard and I share the philosophy that the greatest wines must come from great vineyards; the Simi acquisition is testament to that. With the addition of the Simi estate vineyards and Canandaigua's recently developed vineyards in Monterey, we will have access to almost 5000 acres of grapes in the best growing regions of the world. These vineyards provide the grape resources needed to grow our vineyard-based wine programs. This, along with our strong sales force and distribution network, makes certain that Franciscan Estates will continue to be one of the most important fine wine companies in the world."
The purchase price for Franciscan and related assets is approximately $220 million, plus the assumption of approximately $20 million in net debt at closing. Franciscan's 1998 sales were approximately $50 million on volume of approximately 600,000 cases. Sales have grown at an annual rate of more than 17 percent since 1995, and more rapidly in the last year. Estimated pro forma cash flow, as measured by earnings before interest, taxes, depreciation and amortization, was approximately $20 million for 1998.
The transaction is expected to be financed through the Company's bank credit facility. Completion of the transaction is subject to the satisfaction of customary closing conditions.
Canandaigua Brands, Inc., headquartered in Fairport, New York, is a leading producer and marketer of beverage alcohol brands in the United States and the United Kingdom. As the second largest supplier of wine, the second largest importer of beers and the fourth largest supplier of distilled spirits, Canandaigua Brands is the largest single-source supplier of these products in the United States. In the United Kingdom, Canandaigua Brands is a leading provider of wine and cider, as well as the premier independent wholesaler of beverage alcohol products.
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