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Constellation and Australian Vintage in merger talks

Constellation Brands and Australian Vintage are in talks that could result in the creation of a major new, low-cost Australian wine company.

Constellation is considering combining some of its Australian and UK assets with Australian Vintage in exchange for a substantial but non-controlling share in the company.

The two companies, which together produce one third of Australia’s wine, announced today that they were in ‘preliminary discussions’ about the deal.

It was aimed at combating what Constellation president Rob Sands said were the ‘unprecedented negative operating conditions’ currently facing the Australian industry.

Australian Vintage’s labels labels include McGuigan, Sunnyvale, Passion Pop and Miranda.

Both companies have multiple premium brands. Constellation has Eileen Hardy, Thomas Hardy, Leasingham and Goundrey, and AV has McGuigan, Nepenthe and Tempus Two.

Today’s brief statements gave no details of the operations being negotiated but Sands said the deal ‘would create a more competitive entity, better positioned to deal with the current environment.’

Industry sources said this could confirm recent speculation that the companies’ big volume popular premium wine operations would be melded into the new company.

Constellation also said the Australian Vintage deal was among a number being pursued with ‘various parties’.

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Written by Chris Snow in Adelaide

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