California Wine Makers Kendall-Jackson and Beringer in Merger Talks – Brief Article
Two of California’s largest vintners, Kendall-Jackson and Beringer Wine Estates, are discussing a merger that could lead to the creation of the country’s largest premium-wine company. Although a Kendall-Jackson Wine Estates spokesperson stresses that the two firms are not close to a deal and are “exploring several options,” sources say the winemakers have been taking for several months in an effort to expand their international presence and gain wider distribution for their brands here in the States.
If a deal goes forward, publicly traded Beringer Wine Estates Holdings Inc., the larger of the two, would gain the size and marketing clout needed to boost its stock price, which has stagnated despite increasing profitability and rapidly growing sales of its more expensive Founders Estates wines. An acquisition would allow Kendall-Jackson to tap into the public market without conducting a public offering, a move Chief Executive Lew Platt has been considering since he was hired last November.
The combined company would have a market capitalization of well more than $2 billion, which would be unprecedented for a wine company, analysts said. Consolidation has accelerated in the California wine industry in the last couple of years, as vineyard property has become increasingly scarce and the market much more competitive. In buying Kendall-Jackson, Beringer would not only get its top-selling brands, but also access to thousands of acres of vineyard property across California and in other locations around the globe, such as Argentina, Chile and Italy.
Just as the country’s latest round of food mergers is forcing further consolidation in that industry, mega-mergers such as this could spark other marriages in the wine business. However, some analysts said the deal is far from a sure thing. Just last month, Australia’s largest wine producer, Southcorp Wines, was rumored to be close to buying Kendall-Jackson. And company officials insist that they are still talking with other big players in the wine industry, such as Robert Mondavi Corp.
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