Constellation Brands stakeholders propose ending majority control of Corona brewer
Summary
- Entities affiliated with Sands family float exchange that would reduce its voting power to roughly 20%brewer
The family that controls Constellation Brands Inc. has proposed relinquishing majority voting power in the brewer of Corona and Modelo beers.
Rob Sands, Constellation’s executive chairman and former chief executive officer, wrote in a Saturday letter to the company that entities connected to the Sands family are proposing to exchange each Class B share owned for 1.35 shares of Class A stock. The move would reduce the voting control the family holds in Constellation to roughly 20% from about 60% currently. A copy of the letter was disclosed in a securities filing Monday.
The proposal holds significant benefits for Constellation and shareholders, Mr. Sands wrote in the letter, adding that the family has held voting control since the company’s inception. The Sands family collectively holds more than 98% of the B shares of the wine and spirits maker.
Constellation on Monday confirmed receipt of the proposal that would transition the company to a single-class share structure. The deal would have to be approved by a special committee of independent Constellation board members and a majority of Class A shareholders that don’t hold Class B stock.
The letter said the family is pleased with the company’s success under the first nonfamily CEO, adding “We believe that a declassification will help the Company continue in its growth, and that our stockholders would overwhelmingly support the proposed transaction."
The Sands family said the proposal wasn’t made to facilitate any specific corporate transaction. Class B shares convey 10 votes apiece while Class A shares convey one, giving the family greater influence on matters requiring shareholder votes such as mergers and acquisitions.
Mr. Sands was the third in his family to lead the Victor, N.Y.-based company and in 2019 handed the leadership reins to one of his lieutenants, Bill Newlands. His father Marvin Sands in 1945 bought Canandaigua Industries, a company with eight employees that sold bulk wine in barrels to East Coast bottlers. Canandaigua Wine Company Inc. went public in 1973 and was renamed Constellation in 2000. His brother, Richard Sands, served as Constellation CEO from 1993 and 2007 and remains as executive vice chairman.
Shares in Constellation rose less than 1% in premarket trading. Through Friday’s close, the shares are up about 2% over the past year, compared with a 13% gain in the S&P 500.
This story has been published from a wire agency feed without modifications to the text
