![]() ![]() In the long-term, it could provide Constellation a path to break from its catch-22 bind: it needs to invest beyond Mexican beer to avoid the inevitable generation shifts in consumer preferences but cannot due to the market’s mistrust. In the short term, we should see a multiple re-rating from better corporate governance. “This is a meaningful positive for the stock. “The real news of the day is that the Sands Family B shares are to be eliminated,” Bernstein analysts Nadine Sarwat and Trevor Stirling wrote in a note to clients today. At the time, the company’s bottom line was further affected by losses on unconsolidated investments. On a reported basis, net income hit $399.3m, against a loss of $897.3m the year previous. On a reported basis, operating income stood at $816.4m, versus $75.1m a year earlier, when impairment charges linked to the beer business weighed on profits.Ĭomparable net income attributable to Constellation Brands rose 10% to $504m. Group operating income was up 10% on a comparable basis at $793m. Operating income from beer grew 13% to $762.8m but from wine and spirits fell 13% to $91m. Its export brands include Corona, Modelo, and Pacífico. The net sales from the group’s wine and spirits division grew 2% to $465m, with depletions up 1.2%. Grupo Modelo is a large brewery in Mexico that exports beer to most countries of the world. Net sales from beer, which also includes brands such as Modelo, were up 21% at $1.9bn, with depletions 8.7% higher. The announcement of changes to the Constellation Brands share structure came alongside the publication of its fiscal first-quarter results, which included rising net sales and underlying income on the corresponding period twelve months ago.Ĭonstellation Brands’ net sales increased 17% to $2.36bn in the three months to 31 May. Constellation Brands also filed Q1 numbers Constellation Brands expects the Sands family will continue to be its largest shareholder. The company also owns other Mexican brands like Pacifico and Modelo, and Svedka, which is a Swedish. Robert Sands will become non-executive chairman, while Richard will retain a seat on the company’s board. Constellation Brands owns the Corona beer brewed in the US. Once the changes to the Constellation Brands share structure are in place, Robert and Richard Sands – the group’s executive chairman and executive vice-chairman – will step down from their roles. The cash element will be US$64.64 per share of Class B common stock or a total amount of $1.5bn. Under the terms of the deal with the Sands family, each outstanding share of Class B common stock, including those owned by the family, will be converted into the right to receive one share of Class A common stock plus cash. “In addition, the company’s simplified capital structure will provide a solid foundation as the company continues to pursue its strategic growth initiatives and capital allocation priorities to build shareholder value.” “The proposed share reclassification will strengthen the company’s corporate governance profile by aligning voting rights with the economic interests of all shareholders,” Constellation Brands president and CEO Bill Newlands said. ![]()
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