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More on the big Ascentia deal…

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I have to differ from the angle that my friend, Jon Bonné, is taking in his front-page story today, in the San Francisco Chronicle, on the Ascentia deal, which I reported on yesterday. Jon’s article is headlined “Wine deal returns 5 labels to California” and Jon goes on to say that “The sale returns the wineries to local hands…” and “potentially marks the end of a game of hot potato for these labels, which have been swapped between large beverage companies for years.”

Jon is exultant about the new “local ownership” of these wineries, but I don’t see any reason to believe that just because Ascentia and its partners — including the venture capital firm, GESD — are based in Healdsburg and San Francisco, respectively, that means the deal is a good one for the wineries and consumers. Maybe it is, maybe it isn’t. But an examination of the people behind the transaction (read my post yesterday) suggests that these are hard-nosed businessmen looking to make money. Nothing wrong with that, obviously. But it’s too early to predict a new era of greatness for Geyser Peak, Atlas Peak, Buena Vista, Gary Farrell and XYZin.

Consider, also, that GESD was represented in the deal by a high-powered San Francisco-based law firm, Morrison & Foerster. Among many other things, this law firm represented Ravenswood in its $160 million cash merger with Constellation; represented Christian Brothers when they were sold to Heublein for $100 million; and represented Sebastiani when they sold their Turner Road assets to Canandaigua (later Constellation) for $295 million. In other words, Morrison & Foerster is in the business of helping its clients maximize their profits — and it sounds like they do a darned good job! If I was involved in a big transaction, I’d sure want them on my side.

Again, nothing wrong with any of this. It’s just too early to celebrate the return of these 5 wineries “to local hands.” It’s also too early to assume that this deal marks the end of the “game of hot potato.” Let’s wait and see what Ascentia actually does.

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