US – Independent directors of US alcoholic beverage giant Constellation Brands have brokered a deal with the Sands family to eliminate the group’s Class B shares for Class A stock.
At present, the Sands family holds about 60% voting control of Constellation Brands through the Class B stock.
Eliminating Class B stock in favor of Class A will see the family’s voting control plunge to about 20%, effectively ending their 77-year control of the business.
The agreement comes after Rob Sands, Constellation’s executive chairman and former chief executive officer, proposed in April a deal that would exchange each Class B share owned for 1.35 shares of Class A stock.
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.
The cash element will be US$64.64 per share of Class B common stock or a total amount of US$1.5billion, which represents a 26.5% premium relative to Constellation’s Class A common stock closing share price as of June 29, 2022.
In addition, once the changes to the Constellation Brands share structure is in effect, Robert and Richard Sands, the group’s executive chairman and executive vice-chairman, will step down from their roles.
Robert Sands will take the role of non-executive chairman, while Richard will retain a seat on the company’s board.
Bill Newlands, Constellation’s president, and CEO said: “The proposed share reclassification will strengthen the Company’s corporate governance profile by aligning voting rights with the economic interests of all shareholders. “
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.”
Constellation Brands has premium brands that include Corona Extra, Modelo Especial, Kim Crawford, Meiomi, The Prisoner, SVEDKA Vodka, High West Whiskey, Prisoner Wine Company, Robert Mondavi Winery, and Casa Noble Tequila.
The restructure in the Constellation Brands shares follows its net sales increase of 17% to US$2.36billion in the three months to 31 May.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE.