GRATON -- New York-based alcoholic beverage giant Constellation Brands (NYSE: STZ) today said it signed an agreement to buy the Mark West wine brand from Purple Wine Co., based in the west Sonoma County community of Graton, for about $160 million.
The deal, which includes the trademark and inventory, is expected to close in July, pending common closing conditions.
“While we did not search out this opportunity, it was an offer that made a great deal of sense given the evolution of the brand and the unique strengths and capabilities of Purple Wine Company,” said Derek Benham, Purple Wine owner and chief executive officer, in a statement. “Mark West had reached a critical juncture in its development. Purple Wine Company has grown Mark West to the point where it requires a company with the scale, reach and resources of Constellation Brands to sustain that growth.”
Launched in 2002, Mark West is primarily a California pinot noir brand retailing in the U.S. for $10 to $12 a bottle. Production has grown to nearly 600,000 case a year. The brand includes a California pinot noir, a Russian River reserve pinot noir and a Santa Lucia reserve pinot noir as well as a chardonnay.
“Mark West is an exciting addition to our family of brands,” said Rob Sands, chief executive officer of Constellation Brands. “It is a high-growth, complementary brand to our existing portfolio.”
Mark West is currently the top-selling pinot noir brand and volume sales are growing nearly 35 percent, according to research firm SymphonyIRI.
Constellation Brands expects the Mark West brands to slightly boost diluted earnings per share in fiscal 2013.
Mr. Benham and Constellation have a history of brand sales going back more than a decade. He and his brother Courtney Benham created the Blackstone merlot brand in 1991 and sold the brand to Constellation in 2001 for $144 million, providing seed money for the start of Purple Wine Co. and companion custom winemaker Sonoma Wine Co.
The company today also reported the purchase of the remaining 50 percent share of the Crown imported beer joint venture and its financial results for the first quarter of fiscal 2013. First-quarter sales increased 2 percent from a year before to $725.3 million. Quarterly net income decreased 3 percent to $72.0 million, but earnings per diluted share increased 3 cents to 38 cents