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Diageo acquires Chalone for $260m

Diageo, the world’s biggest spirits company, is set to acquire Californian wine company Chalone after trumping Domaines Barons de Rothschild with a bigger bid.

UK-based sprirts company Diageo confirmed today that it has offered US$260m (€194m) for Chalone, beating Domaines Barons de Rothschild (DBR) which had previously been favourite to acquire the California wine company.

The deal is still subject to regulatory approval in the US but is likely to be cemented by early 2005.

Chalone had orignally accepted an offer from DBR in conjunction with wine giant Constellation and Huneeus of Chile in October, although this did include a break clause should Chalone receive a better offer.

It is now understood that Diageo’s payment includes around US$2.5m (€1.9m) to be paid to DBR for Chalone’s break of contract.

Diageo already owns the Beaulieu and Sterling vineyards in California and Chalone is expected to add to the UK giant’s clout in the premium wine sector.

This new deal throws into doubt a major joint venture between Chalone, DBR, Constellation and Huneeus of Chile. Had DBR taken on Chalone the group intended to develop a luxury brand in Napa.

A Constellation spokesman said the company was examining all possible options, which it was not prepared to divulge at this early stage.

Written by Oliver Styles, and agencies

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