Yesterday, shares of ChaloneWine Group (NASDAQ:CHLN) rose some 13% following the announcement that 46% owner Domaines Barons de Rothschild (Lafite), after months of speculation and discussion, agreed to pay $11.75 per share in cash for the shares of Chalone it doesn't already own. Chalone also scored an additional one-time $1 per share dividend for its shareholders in the Oct. 30 deal.
The agreement includes a provision that states that should a better offer come across Chalone's desk between now and the time the deal closes -- it's expected to do so sometime in Q1 -- then Domaines Barons de Rothschild (Lafite) will either match or approve the competing offer. All told, Chalone investors stand to do a good bit better than they would have if management had accepted the $9.25-per-share, no-dividend offer that DBR made in May.
One detail contained in the deal is especially interesting given recent news. Constellation Brands (NYSE:STZ) always intended to pitch its Oakville vineyard, part of its high-end Franciscan Estates company, into the new company created by Chalone, DBR, and the Quintessa wine holdings of the Huneeus family. But when that was first announced, we didn't know about Constellation's plan to buy Robert Mondavi (NASDAQ:MOND), which was announced late last month.
All told, there's a lot of jockeying going on in the wine business as the various players set themselves up for what they hope will be very good times. The growing interest in more affordable wines, which Mondavi intended to focus on before Constellation showed up, is widely taken as an indicator of what might lie ahead. Whatever the case in the long term, investors who have watched this sector closely have had the opportunity to make some good short-term cash.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.
