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Vincor and Constellation get hostile over takeover

Published:  23 July, 2008

Vincor International officially rejected Constellation brands C$31-per-share offer for the Canadian drinks company last week, leading to a potential war of words after a stinging rebuke from Constellation chairman Richard Sands.

Vincor's board said that the Constellation offer significantly undervalues the business' and that, at multiple of 12.2 times earnings, it was significantly lower than those recently paid in the global wine industry, averaging 16.5 times earnings.

Sands responded: It is almost two months since we approached Vincor with a proposal, and almost a month since we announced we were prepared to pay C$31 a share. In all that time, the Vincor board has failed to demonstrate concrete steps to deliver maximum value to its shareholders.

Vincor's board remains entrenched in a position it took even before we announced our cash offer,' Sands continued. Its reasons were flawed then and are flawed now, yet Vincor's board continues to reject the only existing value-enhancing alternative for its shareholders.'

He finished with a stern warning: We believe that the entrenched position of Vincor's board and management threatens its suppliers, customers, business partners, employees and most especially Vincor's shareholders.'

In what was clearly becoming a particularly hostile bid process, Vincor's chief executive Donald Triggs responded: Sometimes you have to wait longer for another bid, but you don't take the one that's on the table if it's the only bid and it's a stink bid.' He added that he was still in discussions with five other possible suitors. The bid offer lasts until 28 November. Vincor's UK assets includes Western Wines.