Last month, Constellation announced that Kings & Convicts Brewing Co. agreed to acquire the Ballast Point brand for undisclosed terms. The company also revised its agreement with E. & J. Gallo Winery to exclude certain brands from the transaction leading to an adjusted transaction price of approx. $1.1 billion, including an earnout of $250 million. The revisions were undertaken to address competitive concerns by the FTC. Both deals are expected to close by the end of fiscal 2020.
Constellation also struck a deal with E. & J. Gallo to divest its Nobilo Wine brand and related assets for $130 million. The deal is expected to close in the first half of 2021. Updates on these transactions will be worth watching.
Also read: Constellation Brands Q2 2020 Earnings Call Transcript
In the second quarter of 2020, Constellation beat earnings estimates while revenues came in line with expectations. Net sales increased 2% to $2.34 billion while adjusted EPS fell 5% to $2.72.
Last quarter, the company had forecast GAAP EPS to be $0.55-0.75,
and adjusted EPS to be $9.00-9.20. In light of the new and revised
transactions, Constellation will update its guidance once again during the
third quarter announcement.
Shares of Constellation Brands gained over 17% in the past one year. The majority of analysts have rated the stock as Buy and it has an average price target of $223.29.