Constellation Brands Announces Agreement to Purchase Brewery in Obregon, Mexico
(Thomson Reuters ONE) -
* Agrees to purchase Obregon Brewery from Grupo Modelo for $600 million,
subject to regulatory approvals and customary closing adjustments
* Initial Mexicali buildout scaled to 5 million hectoliters of production
capacity with infrastructure investments to support potential expansion to
20 million hectoliters
* Increases free cash flow guidance for fiscal 2017 to a range of $575 - $675
million, as Mexicali capital expenditure estimate is reduced for the year
VICTOR, N.Y., Oct. 31, 2016 - Constellation Brands, Inc. (NYSE: STZ and STZ.B),
a leading beverage alcohol company, announced today that it will submit to the
U.S. Department of Justice a proposal to acquire a brewery operation from Grupo
Modelo, a subsidiary of Anheuser-Busch InBev SA/NV for $600 million. The
brewery, located in Obregon, Mexico, is expected to have four million
hectoliters of production capacity with minimal investment and optimization by
Constellation after closing. This transaction is subject to customary closing
adjustments and U.S. Department of Justice and Mexican regulatory approvals. The
acquisition of the Obregon brewery allows Constellation to immediately obtain
functioning brewery capacity to support its fast-growing, high-end Mexican beer
portfolio and provides flexibility for future innovation initiatives. It also
enables the company to become fully independent from the interim supply
agreement with Grupo Modelo. As a result, Constellation will phase the buildout
of 10 million hectoliters at Mexicali, with the first 5 million hectoliters of
production capacity expected to become operational by December 2019, and
subsequent capacity planned to align with future growth.
"We believe this is the right strategy to provide near-term capacity and greater
flexibility to support our growth and innovation plans, while allowing for the
buildout of our Mexicali brewery over an extended time period," said Rob Sands,
president and chief executive officer, Constellation Brands. "We look forward to
welcoming Obregon's talented employees to our Constellation family and working
together to continue to capture the ongoing growth opportunities we see in the
high-end segment of the U.S. beer market."
The Obregon brewery is located on Mexico's west coast in the state of Sonora,
and will help service Constellation's largest beer markets in the western U.S.
The majority of Obregon's production is currently satisfying the interim supply
agreement today, so it is expected to be a smooth transition during the
continued expansion of the Nava brewery and the buildout of the Mexicali
brewery.
"The magnitude of our long-term investments in Mexico largely remain the same.
The revisions to our operating plans essentially represent an initial shift in
spend to Obregon from Mexicali. This will result in an increase in our free cash
flow estimate for fiscal 2017 to a range of $575 - $675 million," said David
Klein, executive vice president and chief financial officer, Constellation
Brands. "As originally outlined, Mexicali is scalable to 20 million hectoliters
to support the future growth of our beer business, which continues to
significantly outperform the U.S. beer market."
With the Obregon acquisition and phased buildout of the Mexicali brewery, the
company is now targeting the following, which includes the previously announced
glass plant expansions:
+------------------------------------------------------------------------------+
|Mexico Beer Expansion Capital Expenditures ((1)) |
| |
|(in millions) |
| |
| FY 2014 - 2015 FY 2016 FY 2017 FY 2018 - 2021 Total ((2))|
| |
|Nava Projects |
|((3)) $725 $650 $550 - $600 $525 - $575 $2,500|
| |
| |
| |
|Mexicali Brewery $1,000 - |
|Build ((4)) $125 $225 - $275 $1,050 $1,400|
| |
| |
+------------------------------------------------------------------------------+
| $1,525 - |
|Total $725 $775 $775 - $875 $1,625 $3,900|
+------------------------------------------------------------------------------+
((1) )Some rounding for presentation purposes.
((2) )Based on implied midpoint for all ranges.
((3)) Includes expansion of the Nava brewery to 27.5M HL of production
capacity; and glass plant warehouse, rail and furnace expansion. Expected to be
completed by early calendar 2018.
((4)) Includes 5M HL of production capacity and land, water rights,
infrastructure and other site requirements to accommodate scalability to 20M HL
of production capacity. Expected to be completed by end of calendar 2019.
Supplemental Financial Information
The company discusses free cash flow, a non-GAAP measure, in this news release.
Free cash flow, as defined in the reconciliation below, is considered a
liquidity measure and is considered to provide useful information to investors
about the amount of cash generated, which can then be used, after required debt
service and dividend payments, for other general corporate purposes. A
limitation of free cash flow is that it does not represent the total increase or
decrease in the cash balance for the period. Free cash flow should be considered
in addition to, not as a substitute for, or superior to, cash flow from
operating activities prepared in accordance with GAAP.
Range for the Year
Ending February 28, 2017
--------------------------
(in millions)
Net cash provided by operating activities (GAAP) $ 1,500.0 $ 1,700.0
Purchases of property, plant and equipment (925.0 ) (1,025.0 )
------------- ------------
Free cash flow (Non-GAAP) $ 575.0 $ 675.0
------------- ------------
About Constellation Brands
Constellation Brands (NYSE: STZ and STZ.B) is a leading international producer
and marketer of beer, wine and spirits with operations in the U.S., Canada,
Mexico, New Zealand and Italy. Constellation is a Fortune 500(®) company and one
of the top performing stocks in the S&P 500 Consumer Staples Index.
Constellation is the No. 3 beer company in the U.S. with high-end, iconic
imported brands such as Corona Extra, Corona Light, Modelo Especial, Modelo
Negra and Pacifico. The company's beer portfolio also includes Ballast Point,
one of the most awarded craft brewers in the U.S. In addition, Constellation is
the world's leader in premium wine, selling great brands that people love,
including Robert Mondavi, Clos du Bois, Kim Crawford, Meiomi, Mark West,
Franciscan Estate, Ruffino and Jackson-Triggs. The company's premium spirits
brands include SVEDKA Vodka and Casa Noble Tequila.
Based in Victor, N.Y., the company believes that industry leadership involves a
commitment to brand building, our trade partners, the environment, our investors
and to consumers around the world who choose our products when celebrating big
moments or enjoying quiet ones. Founded in 1945, Constellation has grown to
become a significant player in the beverage alcohol industry with more than 100
brands in its portfolio, sales in approximately 100 countries, about 40
facilities and approximately 9,000 talented employees. We express our company
vision: to elevate life with every glass raised. To learn more, visit
www.cbrands.com.
Forward-Looking Statements
This news release contains forward-looking statements. All statements other than
statements of historical fact are forward-looking statements. The word "expect"
and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such identifying words.
These statements may relate to business strategy, future operations, future
Obregon brewery production capacity, prospects, estimated cash provided by
operating activities, estimated capital expenditures, free cash flow estimates,
plans and objectives of management, as well as information concerning expected
actions of third parties. All forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
set forth in, or implied by, such forward-looking statements.
During the current quarter, Constellation Brands may reiterate the forward-
looking statements. Prior to the start of the company's quiet period, which will
begin at the close of business on Nov. 30, 2016, the public can continue to rely
on the forward-looking statements as still being Constellation Brands' current
expectations on the matters covered, unless the company publishes a notice
stating otherwise. During Constellation Brands' "quiet period," the forward-
looking statements should not be considered to constitute the company's
expectations and should be considered historical, speaking as of prior to the
quiet period only and not subject to update by the company.
The forward-looking statements are based on management's current expectations
and should not be construed in any manner as a guarantee that such results will
in fact occur or will occur on any contemplated timetable. The Obregon brewery
transaction between Constellation Brands and Grupo Modelo is subject to the
approval of the United States Department of Justice and Mexican regulatory
approvals, as well as certain closing conditions. There can be no assurance that
these approvals will be granted or will be granted on any contemplated timetable
or that the transaction will occur or will occur on the contemplated terms or
any contemplated timetable.
In addition to the risks and uncertainties of ordinary business operations, the
forward-looking statements of Constellation Brands contained in this news
release are subject to a number of risks and uncertainties, including completion
of the Obregon brewery transaction and optimization on the expected terms,
timetable and costs, including actual closing adjustment amounts; receipt of all
required permits and regulatory approvals by the expected dates and on the
expected terms; completion of the glass plant and Nava brewery expansions and
Mexicali brewery construction by the expected completion dates and on the
expected terms and costs, and with receipt of any necessary permits and
regulatory approvals; the duration of the Interim Supply Agreement; the accuracy
of all projections, including sales trends, glass supply sources, and estimates
of capital expenditure investments; ability to achieve targeted volume growth,
operating margin, and free cash flow generation may all vary due to financial
and operational results which differ from those anticipated and the timeframe in
which achieved will depend on actual financial and operational performance; and
other factors and uncertainties disclosed from time-to-time in Constellation
Brands, Inc.'s filings with the Securities and Exchange Commission, including
its Annual Report on Form 10-K for the fiscal year ended February 29, 2016,
which could cause future performance to differ from current expectations.
CONTACTS
Media
Cheryl Gossin: 585-678-7191
Amy Martin: 585-678-7141
Investor Relations
Patty Yahn-Urlaub: 585-678-7483
Bob Czudak: 585-678-7170
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Constellation Brands Inc via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 31.10.2016 - 14:00 Uhr
Sprache: Deutsch
News-ID 503840
Anzahl Zeichen: 13875
contact information:
Town:
Victor
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 303 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Constellation Brands Announces Agreement to Purchase Brewery in Obregon, Mexico"
steht unter der journalistisch-redaktionellen Verantwortung von
Constellation Brands Inc (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
