Constellation to cut 10% of Vincor's workforce, including 30 jobs in Canada

TORONTO (CP) – Constellation Brands Inc. (NYSE:STZ) plans to cut ten per cent of Vincor International’s workforce, including 30 jobs in Canada, as part of its restructuring plan for the recently acquired Mississauga-based vintner.

The Fairport, N.Y.-based liquor giant, which bought Vincor in a $1.52-billion deal last month, also said late Tuesday that it will incur about $89 million US in restructuring and related charges, including $39 million in pre-tax cash charges.

Most of the job cuts will be in sales, marketing, administrative and production in the U.S., U.K. and Australia, where Constellation’s operations were „significantly larger in scale“ than Vincor’s, Constellation said.

Although 30 Vincor jobs will be cut in Canada, Constellation said it will fill 16 positions, resulting in the elimination of 14 jobs overall. Nearly 80 per cent of Vincor’s 2,358 employees are in Canada.

Most of the job cuts should be complete by the end of Constellation’s fiscal 2007 year. Employees „displaced“ by the plan will receive a severance package, the company added.

„While we are moving quickly to consolidate activities wherever it makes sense, we’re maintaining an appropriate level of staffing and retaining the expertise and experience to maintain and grow the production, marketing and sales of Vincor brands around the world,“ Rob Sands, Constellation Brands’ president and chief operating officer, said in a release.

„With both companies having very similar structures and cultures, the transition should be a smooth one. … We wish we could retain everyone, but that is not possible because a small percentage of positions are duplicative.“

About $35 million US of the pre-tax cash charges related to the restructuring are expected to be recorded in Constellation’s fiscal 2007 results, with about $16 million to be recorded in the second quarter. The remaining $4 million will likely be recorded in the company’s fiscal 2008 year.

Constellation said it will incur a further $50 million, including severance changes and contract termination costs, that will be recorded as one-time cash costs.

The restructuring will reduce ongoing operating expenses by about $40 million to $45 million a year starting in fiscal 2008, Constellation added. Almost half of the savings are expected to be realized in fiscal 2007.

Donald Triggs, prior to leaving his position as Vincor’s chief executive officer June 8, had warned that job cuts would likely occur in Vincor’s finance and international divisions. He had been offered a role in the newly merged company.

Jay Wright, formerly president of Vincor Canada, was promoted to CEO.

The two companies struck a deal in early April following months of highly publicized rancour. Constellation paid $36.50 a share and assumed about $250 million in debt.

The transaction price represented a premium of 55.5 per cent to Vincor’s closing share price on Sept. 27, 2005, prior to Constellation’s initial approach.

Vincor had spent months battling that $1.48-billion offer, worth $33 a share, before its shareholders rejected it last December. They voted to accept the sweetened offer June 1, and the acquisition was completed June 5.

Triggs and Allan Jackson negotiated the takeover of Labatt’s Canadian wine interests in 1989, and in the early 1990s their Cartier winery merged with Iniskillin and then with T.G. Bright to form Vincor, which continued to expand through acquisitions, becoming the world’s eighth-largest wine company.

It has wineries in British Columbia, Ontario, Quebec, New Brunswick, California, Washington state, Western Australia and New Zealand, and its premium brands include Inniskillin, Jackson-Triggs, R.H. Phillips, Toasted Head, Amberley, Kumala and Sawmill Creek.

Constellation, founded in 1945 in upstate New York’s grape-growing Finger Lakes region, is now the only major beer, wine and spirits company based in the United States and became the world’s No. 1 winemaker in 2003.

It has more than 200 brands ranging from jug wines to coveted California reds, beer imports such as Corona and St. Pauli Girl, and liquors like Fleischmann’s vodka, Skol gin and Black Velvet Canadian whisky.

Prior to the release, Constellation Brands shares closed 21 cents higher to $25.05 US on the New York Stock Exchange.

Source: cfrb.com