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Constellation Brands Management Discusses Q1 2013 Results - Earnings Call Transcript

Stocks in this article: STZ

Please also be aware that we may make forward-looking statements during this call. While those statements represent our best estimates and expectations, actual results could differ materially from our estimates and expectations. For a detailed list of risk factors that may affect the company's estimates, please refer to the news release and Constellation's SEC filings.

And now, I'd like to turn the call over to Rob.

Robert S. Sands

Thanks, Patty. And good morning, and welcome to our call. This has certainly been an exciting week for us. First and foremost, by announcing earlier today that we intend to purchase the remaining 50% of Crown from ABI, we are enhancing our participation in the U.S. beer market, which is one of the most attractive sectors of the beverage alcohol industry. The structure of this transaction will solidify our place in this market for the long-term and most importantly will remove the uncertainty that, we believe, has created a significant overhang related to the valuation of our stock. Crown is the #1 beer importer in the U.S. where it has the exclusive right to import, market and sell the Modelo brands, which include Corona Extra, Corona Light, Modelo Especial, Pacifico, Negra Modelo and Victoria.

This transaction represents a significant milestone in the history of the company and the next transformational step in the evolution of our business as it will give Constellation 100% ownership of the import, sales and marketing business for the Modelo brands currently being sold in the U.S. This will also solidify Constellation's position as the largest multi-category supplier for beer, wine and spirits and the third-largest total beverage alcohol company in the U.S. on a volume basis.

Crown will have complete, independent control as a brand owner with respect to distribution, marketing, promotion and pricing. ABI will be responsible for ensuring the continuity of supply and quality of products as well as providing the ability to introduce innovation, although they will have no visibility or future influence on marketing, distribution or pricing.

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