Winery sale sours
Deal to sell Chateau Montelena, made famous in '76 Paris tasting, collapses
Napa Valley's Chateau Montelena Winery dropped plans Wednesday to sell the historic wine estate to a wealthy French investor.
History: The winery helped put California's wine industry on the map in 1976 when it became one of two Napa wineries to win the Judgment of Paris wine competition.
The deal -- valued at $100 million to $150 million by analysts -- fell apart because the buyer, Michel Reybier, couldn't meet terms of the agreement, said Jim Barrett, managing partner at the Calistoga winery.
"The process that just ended did not result in the outcome we or Mr. Reybier desired," Barrett said.
Chateau Montelena's owners will keep the winery and move ahead with plans "to realize the full potential of this unique and special property," Barrett said.
In July, Reybier Investments outbid several U.S. wine companies for Chateau Montelena, one of the upstart Napa Valley wineries that helped put California's wine industry on the map.
The winery won international acclaim in 1976 when its Napa Valley chardonnay bested top French wines at the Judgment of Paris wine-tasting competition.
Reybier, who built a fortune in the food business, owns one of the great wine estates of Europe, the famed Bordeaux chateau Cos d'Estournel. He also owns a chain of luxury hotels and an oil exploration company.
Chateau Montelena spokesman Jeff Adams on Wednesday wouldn't comment on terms of the deal or say why it collapsed. The winery, which produces 40,000 cases a year, isn't seeking new investors and is continuing a program to replant its estate vineyards, he said.
"We're moving forward," Adams said.
Wine business analysts said the market for winery acquisitions has been hurt by the global credit crunch, which has stemmed the flow of investment financing.
"It's a different environment now," said Jon Fredrikson, a wine industry consultant with Gomberg, Fredrikson & Associates in Woodside. "Everyone is wary. No one knows what's around the corner."
Earlier this year, the U.S. dollar plummeted in value against the euro, making California wine properties a relative bargain for European investors.
"Someone with a strong currency has an advantage," said Vic Motto of Global Wine Partners, a St. Helena investment bank that advises clients on winery deals.
In recent weeks, the dollar gained value as the U.S. economy's troubles spread to the rest of the world. California wineries are no longer such a bargain, Motto said.
"It's affecting everyone," he said.
Chateau Montelena was founded in 1882 by Alfred Tubbs, a San Francisco rope-maker who became wealthy selling cordage for sailing ships and mine operations. He built the castle-like stone winery and hired a French-born winemaker.
Barrett and several partners acquired the property in 1969 and produced their first wines in 1972. Chateau Montelena later became famous for its estate-bottled cabernet sauvignon. The 2004 vintage sells for $125.
Today, the 172-acre estate at the foot of Mount St. Helena includes 110 acres of vineyards.
Greg Ralston will continue to serve as managing director of the winery. Winemaker Cameron Parry and longtime vineyard manager Dave Vella also will remain, Barrett said.