There you have it. An all-cash offer to buy Robert Mondavi Corporation. The offer was confirmed today by a company press from Constellation Brands, Inc. The total value of the deal is approximately $1.3 billion, including approximately $970 million of equity on a fully-diluted basis plus the assumption of approximately $333 million of Mondavi net debt.
The final nail, should this offer be accepted (and from a business standpoint, an all-cash offer for more than your current stock price is tough to pass up). Why the final nail? Well, as we reported earlier, Robert Mondavi Corporation was moving away from what Robert Mondavi the man spent the better part of the last 40 years building – world class wine from California. In the downturn of the market it was interesting to observe that the Mondavi story demonstrated that fine wine is so specialized and intricate that it may be impossible to make it a huge, publicly traded business. The demand of Wall Street to have constant increases in earning made it impossible to make “world class wine” a business cash cow – its simply too affected by uncontrollable events (weather, bugs, etc.). So Mondavi had to make the decision to move toward “2 Buck Chuck” competitors and away from its premium brands a la Opus One.
This is the final nail because Constellation Brands, while a good acquiring company from the standpoint of Wall Street and shareholders, will be able to squeeze more from the Mondavi brands but it is not known for creating ultra-premium brands. In fact, it mostly markets beer with brands like Corona, St Pauli Girl, etc… Operational efficiency and earnings will become the mission for Mondavi.
A stark contrast to creating World Class Wine from California.
Its a happy day for investors, and we know plenty of them. But its really a sad day for those who appreciate the CA wine industry that Robert Mondavi, the man, had such a large part in creating.
Thanks, Mr. Mondavi, for creating the Wine Life. We’re sorry the dream had to end this way.