Mammoth alcohol producer and marketer Constellation Brands tapped JPMorgan and Citigroup for a credit last week, pushing forward with its C$1.4 billion bid for Vincor International despite getting the cold shoulder from the company. The deal includes a $900 million term loan "C" and a $300 million term loan "A." Price talk is LIBOR plus 1 3/4% on the "C" loan and LIBOR plus 1 1/2% on the "A" loan. Vincor has repeatedly stated that Constellation Brands' offer is too low and earlier this month its directors unanimously recommended the rejection of the takeover bid. Donald Triggs, Vincor's president, ceo and director, did not return calls.
In September, Constellation first made a proposal to Vincor's board of directors, offering to purchase all of the company's outstanding shares for C$31.00 per share. The offer was about 39% over Vincor's closing share price on Sept. 8, the day before Constellation submitted its proposal, a spokesman for Constellation said. The C$1.4 billion price includes about C$1.1 billion of equity and the assumption of about C$305 million of Vincor's net debt according to the company's public filing on June 30.
Vincor said the C$1.4 billion bid was low and has started a public campaign against the offer, running newspaper advertisements advising shareholders not to tender their shares. In an investor presentation in September, Vincor indicated that the board and its advisors are working on a range of alternatives to maximize shareholder value, including strategic partners, financial partners, individual brands and business alternatives as well as standalone partners.
The Constellation spokesman said the company's bid was based on what it knew about Vincor. "They have not shared any information with us," he said. "Without the benefit of any kind of diligence or access to information, we saw no reason to offer more than the company is worth based on publicly available information." The Constellation offer expires at 5 p.m. on Nov. 28, but there is always the possibility of an extension. The spokesman said Vincor is a nice fit for Constellation because it owns a significant market share of wine business in Canada.