Modelo’s US Brewer Constellation Names New Directors in Pact With Activist Investor

Elliott Investment Management had been engaging privately with Constellation for months and is among its top-10 shareholders, people with knowledge of the matter said

Modelo Especial beer
By Crystal Tse
July 19, 2023 | 10:10 AM

Bloomberg — Constellation Brands Inc. (STZ) appointed two new independent directors as it reached a cooperation agreement with activist investor Elliott Investment Management.

The beverage maker named Luca Zaramella, chief financial officer of Mondelēz International Inc. (MDLZ), and William Giles, former CFO of Autozone Inc. (AZO), as independent directors to its now-13-member board, according to an announcement Tuesday.

Constellation also reached information-sharing and cooperation agreements with Elliott that include a so-called standstill agreement for about one year, prohibiting Elliott from launching fresh campaigns against the company, a regulatory filing showed.

Elliott had been engaging privately with Constellation for months and is among its top-10 shareholders, people with knowledge of the matter said.


“We engage with shareholders on an ongoing basis to discuss various aspects of our business and to gauge investor sentiment, and we welcome their input,” a spokesperson for Constellation said in an emailed statement. “Regarding our information sharing and cooperation agreements with Elliott, we’ve been engaged in discussions over the past several months and appreciate the perspective they’ve offered.”

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The Victor, New York-based company also announced plans to host an investor day later this year to discuss strategic initiatives and its outlook for its beer, wine and spirits businesses.

Constellation, mostly known as the maker of Corona and Modelo beer, also owns a portfolio of cannabis investment. It invested several billion dollars in medical marijuana maker Canopy Growth Corp., which lost about 83% of its value this year as the cannabis market plateaus.


Sands Family

Constellation has been moving away from being a family-controlled business after the brothers Rob and Richard Sands received a payout for giving up their special voting powers over the company. Rob Sands also stepped down from his board-chair role after the company’s annual meeting on Tuesday.

The new independent directors add financial expertise to the board, Constellation Chief Executive Officer Bill Newlands said in the statement. “We appreciate the perspective provided by our counterparts at Elliott, who have provided valuable input as we continue to take steps to enhance value to the company’s shareholders and other stakeholders,” Newlands said.

“We believe the company’s meaningful growth potential, powered by its premier Mexican beer portfolio, is not currently reflected in the company’s stock price, and represents a significant amount of value that can be created from here,” Michael Goldberg, portfolio manager at Elliott, said in the statement.

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