Constellation Brands, Inc. (NYSE: STZ), the world's largest wine company, has signed an agreement to sell its Australian and UK business, to Champ Private Equity of Sydney, Australia. The transaction is valued at approximately A$290 million.

The company will retain an approximate 20 percent interest in the business and receive cash proceeds of about $230 million, subject to closing adjustments. Constellation said the deal is expected to close by the end of January 2011 and is subject to customary and routine closing conditions.

The transaction includes virtually all Constellation's Australian, UK, and South African brands, wineries, facilities, vineyards, and the company's 50 percent interest in Matthew Clark, the UK wholesale joint venture. All CWAE employees will transfer with the business.

"During the last two years, Constellation has implemented a strategy focused on driving profitable organic growth through premiumizing its world class brand portfolio and improving margins, return on invested capital and free cash flow," said Rob Sands, president and chief executive officer, Constellation Brands.

"The CWAE business sells quality wines from the important Australian appellation and has significant scale, but continues to be faced with challenging market conditions. Therefore, the business is no longer consistent with Constellation's strategy. We believe Champ has the requisite skills and motivation necessary for accelerating the success of the CWAE group."

Constellation said it expects that net proceeds will be used to reduce borrowings. Any after-tax gain or loss recognized in connection with this transaction will be excluded from the company's comparable basis diluted earnings per share (EPS). The impact of this transaction is expected to be neutral to ongoing reported basis and comparable basis diluted EPS for fiscal 2011 and neutral to slightly dilutive for fiscal 2012.