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Constellation Brands Looking Into IPO for Wine Business

Constellation Brands is exploring the possibility of an initial public offering of some of its wine business in Canada. The move would tilt the rest of the beverage company’s brand portfolio much more toward beer.

The evaluation is only one part of an ongoing effort to create shareholder value and to strengthen the financial profile of the company, said Constellation in a statement on Wednesday. The final decision is expected to come sometime during 2016, said the company based in Victor, New York.

Splitting off a part of the wine portfolio makes the company more reliant on its beer sales, a division it has expanded in a huge way with the acquisition in 2013 of the U.S. Corona business and continued with the 2015 acquisition for $1 billion of Ballast Point a craft brewer.

Constellation, which sells Clos du Bois, Ruffino and Robert Mondavi wines, announced in 2015 that it is the leading wine company in Canada. The company owns six of the top 25 table wines in the country with Jackson-Triggs as the label that is the highest selling and with Inniskillin as the company’s top icewine.

Constellation said the company posted strong financial results for its most recent year, which ran through the end of February.

With acquisitions helping in its growth, Constellation said on Wednesday that it was buying Prisoner Wine Co, which makes luxury wines that include Blindfold and Saldo brands, for a price of $285 million. The deal should close by the end of April, said company officials.

Constellation on Wednesday also reported profit for its fourth quarter rose to $1.19 per share, excluding certain items. That topped the projections of analysts of $1.15 per share.

Earnings during the current fiscal year will be between $6.05 and $6.35 per share, said the company. Analysts were expecting earnings of $6.11 per share.

Shares of Constellation were up nearly 5% in New York by early afternoon trading at $158.75. Constellation already has increased in prices more than 6.3% through Tuesday’s end of business.

One analyst said he believed Constellation shares are being overvalued; even the company has produced solid earnings.

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