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Gallo/Constellation brand sale hits FTC snag

From SEC Form 8-K, filed May 20, 2019

As previously disclosed, on April 3, 2019, Constellation Brands, Inc. (“Constellation”) and E. & J. Gallo Winery (“Gallo”) entered into an Asset Purchase agreement (the “Asset Purchase Agreement”), pursuant to which Gallo agreed to acquire a portion of Constellation’s wine and spirits business (the “Transaction”). The Transaction is subject to regulatory approval and other customary and routine closing conditions.


Constellation and Gallo filed notification and report forms in connection with the Transaction as contemplated by the Asset Purchase Agreement with the U.S. Department of Justice (“DOJ”) and the U.S. Federal Trade Commission (“FTC”) pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “HSR Act”) on April 17, 2019. On May 17, 2019, Constellation and Gallo each received a request for additional information and documentary material (the “Second Request”) from the FTC in connection with review of the transactions contemplated by the Asset Purchase Agreement.


Issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both Constellation and Gallo have substantially complied with the Second Request or such later time as the parties may agree with the FTC, unless the waiting period is terminated by the FTC. Consequently, Constellation no longer expects the Transaction to be completed in the first quarter of its 2020 fiscal year and now expects the Transaction will be completed in the second half of calendar year 2019.


Constellation previously provided certain guidance regarding fiscal year 2020 assuming the Transaction would be completed at the end of its first quarter. Investors should not rely on that prior guidance. Constellation expects to update its guidance at a future date when and if it has more information regarding these matters.


Constellation will continue operating its entire wine and spirits business in the normal course until the Transaction closes.