Filed by Constellation Brands, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Constellation Brands, Inc.
Commission File No. 001-08495
The following are excerpts of Constellation Brands, Inc.s first quarter fiscal 2023 earnings call held June 30, 2022.
Corporate Participants
Garth Hankinson Constellation
Brands, Inc. - Executive VP & CFO
Patty Yahn-Urlaub Constellation Brands, Inc. - SVP of IR
William A. Newlands Constellation Brands, Inc. - President, CEO & Director
Conference Call Participants
Bryan Spillane - BofA
Securities, Research Division
Bonnie Herzog - Goldman Sachs Group, Inc., Research Division
Dara Mohsenian - Morgan Stanley, Research Division
Christopher
Carey - Wells Fargo Securities, LLC, Research Division
Lauren Lieberman - Barclays Bank PLC, Research Division
Nadine Sarwat - Sanford C. Bernstein & Co., LLC, Research Division
Robert Ottenstein - Evercore ISI Institutional Equities, Research Division
Andrea Teixeira - JPMorgan Chase & Co, Research Division
William Chappell - Truist Securities, Inc., Research Division
Presentation
William A.
Newlands - Constellation Brands, Inc. - President, CEO & Director
On a separate note, earlier today, we also announced
that our Board of Directors has approved a proposal to eliminate our Class B common stock. After an extensive review and analysis by the special committee and with the special committees recommendation, our Board agreed that it is in the
best interest of the Company and all Constellation shareholders to eliminate the Class B common stock.
Under the proposal, owners of our
Class B common stock, which are primarily the Sands family, would convert those shares into Class A common stock and receive $64.64 per share in cash, which equates to a total amount of $1.5 billion. The transaction requires
shareholder approval, including approval of a majority of the issued and outstanding shares of Class A common stock not held by the Sands family or their affiliates, executive officers of the Company or directors that also hold Class B
common stock.
One shareholder approval is received, we expect that the proposal would deliver a number of corporate governance and other benefits,
including the elimination of the higher vote Class B common stock, including the associated voting control of the Sands family and a reduction in the concentration of voting power; a simplification of the companys equity capital structure
to better align the voting rights and interests of all shareholders; a broader appeal of our shares to a larger base of investors who prefer single voting class common stock structures; operating cost savings associated with executive salary and
certain benefits as well as administrative savings from maintaining the Class B common stock.
We expect the executive salary and benefits cost
savings will be about $15 to $20 million per year. Using the $17.5 million midpoint of that cost savings range and our current trading multiple of approximately 21x P/E. That equates to roughly $300 million of value on a tax-effective basis. Other corporate governance benefits include a rotation of the lead independent director position on the Board at the next available normal cycle opportunity. And finally, a shift to majority
voting in uncontested elections from the current plurality standard for our Board of Directors and the adoption of a Board anti-pledging policy.