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Constellation wine deal on track
SYDNEY, Australia (CNN) -- New York's Constellation Brands will become the world's largest wine company when its $1.4 billion deal to buy Australia's BRL Hardy closes on April 9. Constellation and BRL Hardy announced the friendly merger in January, with Constellation saying the deal would lift its total sales from $2.7 billion to $3.2 billion. That will place it ahead of the privately held E & J Gallo group of California, in terms of sales. Constellation won approval for the acquisition on March 27 from the Supreme Court of South Australia, clearing its final regulatory hurdle and ending trade in BRL Hardy shares on the Australian Stock Exchange. Constellation chairman and CEO Richard Sands said in a presentation in the United States on Wednesday that the deal "greatly enhanced" the group's growth outlook because BRL Hardy had the potential to grow at 20 percent a year. Constellation deals in wines, spirits and beer. Its major markets are the United States and the UK. Adelaide-based BRL Hardy -- which is changing its name to the Hardy Wine Co under the deal -- is already Australia's largest wine producer by volume and a major seller in the U.K. market. It is No. 2 in market share in New Zealand. Sands said Hardy was very much a growth acquisition, and noted that the Australian wine industry had the world's best cost structure. He said "New World" wines (often defined as those from Australia, South Africa and the Americas) generally were growing rapidly while "Old World" (European) wines were declining. BRL Hardy managing director Stephen Millar has become chief executive of Constellation Wines, covering nine operating subsidiaries around the world. Its chief rivals in Australia are premium wine group Southcorp -- which has brands such as Rosemount, Penfolds and Lindemans -- and the beverage giant Foster's, which moved heavily into wine with its $1.6 billion purchase of the U.S.-based Beringer Group in 2000. Lion Nathan, the No.2 Australasian brewer that is owned 46 percent by Japan's Kirin, also has wine operations. Internationally, Constellation's other main rivals are Diageo and Allied Domecq.
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