July 13, 2021

Tobacco-to-drinks group Altria is selling its US Ste. Michelle Wine Estates (SMWE) business to private equity firm Sycamore Partners in a $1.2 billion deal. The all-cash transaction is through Altria Group subsidiary UST and is expected to close in the second half of 2021, subject to the usual clearances.

SMWE – claimed to be the third-largest premium wine company in the US – makes and markets premium lines sold under various labels, including Chateau Ste. Michelle, 14 Hands and Stag’s Leap. It imports and markets Antinori and Champagne Nicolas Feuillatte products in the United States.

On 3,500 acres in Washington state, Chateau Ste. Michelle produces award-winning Riesling, Chardonnay, Merlot and Cabernet Sauvignon wines. On the acquisition by Sycamore Partners, SMWE’s president and CEO commented: “We are well-positioned to drive the next phase of our growth.”

Shift away from wine

The move from Altria is part of a strategy to be more focused on a transition from its core smoking business, which includes tobacco companies such as Philip Morris USA, to what it calls ‘a non-combustible future’ with products like oral nicotine pouches and exclusive US commercialisation rights to the IQOS tobacco heating system and Marlboro HeatSticks.

Credit Suisse Securities (USA) represented Altria as financial advisor on the sale of SMWE, and White & Case provided legal counsel.

More resources: the global alcohol markets and US wine market.

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