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News > Midsized Companies
Mondavi drawing bidders
Report says at least 10 potential bidders are looking at winemaker; luxury brand could be spun off.
October 27, 2004: 7:41 AM EDT

NEW YORK (CNN/Money) - Winemaker Robert Mondavi Corp. is drawing interest from a number of new bidders, even as some leading companies in the sector say they aren't looking at joining the field of potential buyers, according to a published report.

Robert Mondavi
Constellation Brands Incorporated
Diageo Plc
Napa Valley (California)

The Wall Street Journal reported Wednesday that there are at least 10 potential bidders looking at the whole company or the small but prestigious luxury division. Some members of the Mondavi family, a pioneer in Napa Valley winemaking, could be bidders for some of the assets, the paper said.

On Oct. 19 Constellation Brands revealed it had offered Mondavi's class A shareholders $53 per share in cash, and offered the family-controlled class B shareholders $61.75 per share in cash. The offer represented a 37 percent premium from the Oct. 11 closing price for the class A shares, but shares of Mondavi (Research) have since risen to $54.08, suggesting investors are looking for a raised bid from Constellation (Research) or new offers from other bidders.

The Journal quoted executives and sources at some leading winemakers including Kendall-Jackson Wine Estates, Allied-Domecq PLC and Diageo as saying they aren't interested in bidding for Mondavi.

The paper said that those involved in the bidding process are suggesting its sales and profits can grow if the luxury brand is spun-off from its "lifestyle" business, which sells wine for about $10 a bottle. The luxury brand accounts for 6 percent of its sales volume, 19 percent of its revenue and 14 percent of its pretax earnings, as it siphons off capital to invest in expensive small batches of wine.

The paper reports that some Mondavi family members are interested in buying back the flagship Robert Mondavi Winery, which is used by the luxury business. Constellation is interested in buying the entire business.  Top of page

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