ARTICLE: Hardys wine company sold for $290m

[n4sir]

Hardys wine company sold for $290m
Nigel Austin From: The Advertiser
December 25, 2010 12:01AM

CONSTELLATION Brands has announced it will sell the assets of the troubled Hardy wine company to Sydney-based CHAMP Private Equity in a deal worth $290 million.

The sale will include Hardys Reynella winery and some of Australia's most prominent wine brands. Labels in the Hardy stable include Hardys, Chateau Reynella, Tintara, Leasingham, Stonehaven, Banrock, Berri Estates, Renmano and Omni.

http://www.adelaidenow.com.au/business/ ... 5975701946

[RogerPike]

From the bottom of our hearts we are disposed to exclaim "Good riddance to bad rubbish."

Roger

[phoenix]

Sorry about the cross-post, I only found this thread after I posted in another thread. Does anyone know anything about CHAMP, and is this a case of the devil you know (aka Constellation) over the devil you don't know (aka CHAMP)

[griff]

My Goodness that price is low. Even for 80%. Talk about a fire sale!

cheers

Carl

[Nayan]

That's a hell of a lot less than the AU$1.5 billion that Constellation originally paid for it...

[morph_associates]

A great loss for Constellation, but a great win for we industry wine buyers... I hated working with Constellation before, but this at least gives their brands a fresh start... I quite like the Leasingham sparkling shiraz, so not all is lost, surely!

[Fortune 3rd reg. attempt]

Sorry about the cross-post, I only found this thread after I posted in another thread. Does anyone know anything about CHAMP, and is this a case of the devil you know (aka Constellation) over the devil you don't know (aka CHAMP)

....some dealings with them. Not sure that they will be as patient and thoughtful as Constellation. Personally I will be keeping an eye out for bargains in case the baby goes with the bathwater.

[RogerPike]

Sorry about the cross-post, I only found this thread after I posted in another thread. Does anyone know anything about CHAMP, and is this a case of the devil you know (aka Constellation) over the devil you don't know (aka CHAMP)

....some dealings with them. Not sure that they will be as patient and thoughtful as Constellation. Personally I will be keeping an eye out for bargains in case the baby goes with the bathwater.

My bolding and underlining above.

We seem to be on different planets. or maybe even constellations

Roger

[Fortune 3rd reg. attempt]

Sorry about the cross-post, I only found this thread after I posted in another thread. Does anyone know anything about CHAMP, and is this a case of the devil you know (aka Constellation) over the devil you don't know (aka CHAMP)

....some dealings with them. Not sure that they will be as patient and thoughtful as Constellation. Personally I will be keeping an eye out for bargains in case the baby goes with the bathwater.

My bolding and underlining above.

We seem to be on different planets. or maybe even constellations

Roger

I'm sorry to say that I meant that comment quite deliberately. Standard procedure for Private Equity is (1) sell anything that doesn't move (2) Eliminate budgets for any expense that is not absolutely essential (3) merge with someone else so you can talk about cost-savings from synergies and eliminating duplication (4) pass the future mess onto someone else before the music stops because of the short-sighted expense reduction imposed at (2).

So I will be looking out for bargains as they turn inventory into cash!

[RogerPike]

I am aware of normal Private Equity strategies Fortune. My point is that Constellation have behaved in much the same way although their merger attempt with AV failed.

They have also been turning inventory into cash for the last eight months or so.

How anyone can use the term 'thoughtful' to describe Constellation is beyond my comprehension. I would suggest that the term 'rapacious' may be more fitting.

Roger

[Fortune 3rd reg. attempt]

In fact you and I agree on Constellation, but I think that Champ will be worse!

[qwertt]

The problem with private equity firms are that they do not have a 'brand' to protect. Typically, they are accountants on the make brandishing razors. Unlike constellation, I suspect they won't even pretend to care about heritage values, quality, grape growers, etc. but will deal with the assets they have bought on a purely short-term commercial value. The good news is, apart from the possible fire sale of inventory, is that there may be some gems in the way of vineyards and facilities also sold off (Good news only if the prospective buyers are in the wine business;bad news if the property lends itself to repurposing as medium density housing).

[morph_associates]

Let me just say that Constellation was chasing money from us long BEFORE invoices became due, so we knew something was awry many months ago. That's seriously poor business management and a disgraceful way to handle key accounts. To make matters worse, they had horrible people in the accounts department calling to remind us that payments would be due in 7 days, then again in 3 days time. Umm, hate to break it to them, but we never ever paid anything late to them (or any other wine supplier) so why the torrid attitude? Oh yes, that's right.. to collect money before selling up.

As for CHAMP, they can have the companies if they like, but I'll continue not buying those labels on past experience alone. I know I'm not alone in that boat.

[n4sir]

The problem with private equity firms are that they do not have a 'brand' to protect. Typically, they are accountants on the make brandishing razors. Unlike constellation, I suspect they won't even pretend to care about heritage values, quality, grape growers, etc. but will deal with the assets they have bought on a purely short-term commercial value. The good news is, apart from the possible fire sale of inventory, is that there may be some gems in the way of vineyards and facilities also sold off (Good news only if the prospective buyers are in the wine business;bad news if the property lends itself to repurposing as medium density housing).

No offence, but since when has Constellation cared about heritage values, quality, people and grape growers?

viewtopic.php?f=1&t=10058

As far as CHAMP goes, former chief executive at BRL Hardy Stephen Millar has backed the move - whether that's good news or not remains to be seen, but as Roger has pointed out above, the worst possible actions you've identified couldn't be that much different/worse than the despicable actions of Constellation. We have some clients that have worked for Penrice Soda for many years, and my vague recollection is that they were happy under the management of CHAMP, and the opposite with the new buyers - chances are I'll catch up with one of them in a month or so and I should remember to ask them about it.

http://www.heraldsun.com.au/ipad-applic ... 5977582457

In a related matter, while I haven't been able to find anything on the web about it I did see an article in the Advertiser yesterday (dated 30th December) that reported Tim Adams had agreed to buy the Leasingham winery complex off Constellation - this is in addition to 75ha of Leasingham vineyards a few months ago:

http://www.harpers.co.uk/news/8211-adam ... eyard.html

His plans are to start up the winery again with a new label called "Mr Mick" (after Mick Knappstein) and a restaurant - while it's great to see the place remain as a winery, I also sincerely hope Tim hasn't bitten off way more than he can chew. I guess we can hope that somehow Tim can also get hold of the Leasingham brand name off CHAMP that Constellation refused to sell to him to complete the resurrection - until that happens Leasingham as a name is only a virtual brand, a zombie, a place with one vineyard, no winery, and no people. (sorry Daniel)

Cheers,
Ian

[daz]

Reminds me of SouthMount and the Seaview label.

[n4sir]

Tyson just confirmed at the other place the Tim Adams purchase of the old Leasingham winery:

The Tim Adams buyout is now official.

http://www.clearaboutwine.com.au/wp/ind ... e-my-hero/

http://www.winespectator.com/webfeature/show/id/44285

I have seen a press release from Constellation and Tim Adams, although I don't think this has yet been widely circulated.

Cheers everyone,

Tyson.

[xsorxpire]

Well done Tim Adams.
When i was last in the Clare Peter Barry told me i should go have a look at Leasingham.

Good to se it will not be a nursing home. (Though i may need one if i keep up drinking at the rate i do...)

[n4sir]

Philip White's parting salvo at Constellation, covering some of their chequered history in McLaren Vale:

http://drinkster.blogspot.com/2011/01/c ... plonk.html

[n4sir]

“Mr Mick was the last private owner and I am his last apprentice, yes it’s a REAL story and not another bullshit virtual label!” Tim said. “As Mick said, ‘There are two kinds of people, those who were born in Clare and those who wish they were.’ How could we forget such a man?”

This is one reason why I like Tim Adams - I've always found him to be 100% brutally honest. 100% brutal, and 100% honest.

He's intimidating at times, yet I always feel I know where he's coming from - I always thought he resembled Tackleberry from the Police Academy movies too!




Cheers,
Ian

[TiggerK]

Good call Ian, nice 80''s classic movie reference, and I really enjoyed his 2010 Riesling this evening. Far too easy to drink, so juicy and limey!

[n4sir]

The problem with private equity firms are that they do not have a 'brand' to protect. Typically, they are accountants on the make brandishing razors. Unlike constellation, I suspect they won't even pretend to care about heritage values, quality, grape growers, etc. but will deal with the assets they have bought on a purely short-term commercial value. The good news is, apart from the possible fire sale of inventory, is that there may be some gems in the way of vineyards and facilities also sold off (Good news only if the prospective buyers are in the wine business;bad news if the property lends itself to repurposing as medium density housing).

No offence, but since when has Constellation cared about heritage values, quality, people and grape growers?

viewtopic.php?f=1&t=10058

As far as CHAMP goes, former chief executive at BRL Hardy Stephen Millar has backed the move - whether that's good news or not remains to be seen, but as Roger has pointed out above, the worst possible actions you've identified couldn't be that much different/worse than the despicable actions of Constellation. We have some clients that have worked for Penrice Soda for many years, and my vague recollection is that they were happy under the management of CHAMP, and the opposite with the new buyers - chances are I'll catch up with one of them in a month or so and I should remember to ask them about it.

I had a word with one of our clients, and they pretty much confirmed their experience with CHAMP was well along the lines of qwertt's description - they stripped away as many major physical assets as they could, before selling on what was left over. In short, unfortunately we can probably expect more of the same...

Speaking of which, I heard from an industry source that Houghtons have walked away from their lease on the Justin vineyard in Frankland, which was a key contributor to the Jack Mann flagship - not sure if this was a Constellation or CHAMP decision, but on the surface it's another questionable one that has the potential to seriously undermine one of their top wines.

Cheers,
Ian

[griff]

The problem with private equity firms are that they do not have a 'brand' to protect. Typically, they are accountants on the make brandishing razors. Unlike constellation, I suspect they won't even pretend to care about heritage values, quality, grape growers, etc. but will deal with the assets they have bought on a purely short-term commercial value. The good news is, apart from the possible fire sale of inventory, is that there may be some gems in the way of vineyards and facilities also sold off (Good news only if the prospective buyers are in the wine business;bad news if the property lends itself to repurposing as medium density housing).

No offence, but since when has Constellation cared about heritage values, quality, people and grape growers?

viewtopic.php?f=1&t=10058

As far as CHAMP goes, former chief executive at BRL Hardy Stephen Millar has backed the move - whether that's good news or not remains to be seen, but as Roger has pointed out above, the worst possible actions you've identified couldn't be that much different/worse than the despicable actions of Constellation. We have some clients that have worked for Penrice Soda for many years, and my vague recollection is that they were happy under the management of CHAMP, and the opposite with the new buyers - chances are I'll catch up with one of them in a month or so and I should remember to ask them about it.

I had a word with one of our clients, and they pretty much confirmed their experience with CHAMP was well along the lines of qwertt's description - they stripped away as many major physical assets as they could, before selling on what was left over. In short, unfortunately we can probably expect more of the same...

Speaking of which, I heard from an industry source that Houghtons have walked away from their lease on the Justin vineyard in Frankland, which was a key contributor to the Jack Mann flagship - not sure if this was a Constellation or CHAMP decision, but on the surface it's another questionable one that has the potential to seriously undermine one of their top wines.

Cheers,
Ian

Bah! I think it is time that we sadly put Hardy's to bed. I just hope that places like Leasingham and whomever takes the fruit from Justin's (I hope it is Cherubino) can rise from the ashes.

cheers

Carl