The Wine Group, the third largest wine producer in California, has won the bidding war for Napa bulk wine company Golden State Vintners.
The San Francisco company's offer of $8.25 a share was accepted by Golden State's directors, it was announced by Golden State Vintners on Friday.
The purchase, valued at $111 million, moves The Wine Group up significantly in California wine production, but it is still a distant third behind beverage giants Gallo and Constellation Brands in worldwide production.
It also ends weeks of uncertainty over the fate of Golden State Vintners, which was the subject of a bidding war between The Wine Group and a group headed by the Golden State chief executive.
And it is also one of the largest sales since the Sebastiani family sold its Turner Road Vintners facility in the Central Valley to Constellation Brands two years ago for $295 million.
Golden State Vintners, The Wine Group and The O'Neill Acquisition Group, which was also bidding for Golden State, all refused to comment Friday.
Analyst Jon Fredrikson of Gomberg, Fredrikson & Associates in Woodside said the purchase significantly increases The Wine Groups production capacity.
"This enables The Wine Group to keep on a strong upward growth path," Fredrikson said. The purchase "gives The Wine Group a much bigger production footprint to enable it to expand over the next five to 10 years."
The agreement also ends a bidding war between The Wine Group and the O'Neill Acquisition Group, headed by Golden State chief executive Jeff O'Neill with support from Constellation Brands, the world's largest spirits company.
Golden State Vintners, headquartered in Napa, produces 12.5 million cases of wine a year, most of that bulk wine on contract and for other wineries. Its wines include the low-cost Golden State brand, and it produces private labels for such grocery outlets as Safeway.