Acquisitive booze company Constellation Brands
Constellation's Franciscan Estates operation will distribute Ruffino wines in the U.S., adding yet another quiver to Constellation's ever-growing wine arsenal. Pending the close of the Mondavi purchase, the company -- according to some reports -- will control about a fifth of all wine sales in this country, a sizable chunk in the largely fragmented alcohol business, in which scale and distribution are critical.
Investors who watch the wine, beer, and spirits business know how fierce the competition to sign valued brands and add new market and market segments can be: Beyond the wine cask, we've recently seen SABMiller and Anheuser-Busch
Constellation, for its part, is betting that all the money it has spent -- some analysts criticized the price it agreed to pay for Mondavi -- will pay off with market dominance. The combined company will be big and well-positioned in a number of different wine segments, not to mention a strong cash producer.
While investors should always regard big-dollar acquisitions with some skepticism and scrutiny, Constellation's shareholders are supporting management's decisions with their dollars thus far: The stock is up about 25% since the deal was announced.
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Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.