Diageo to Buy Chalone Wine Group for $260 Million

Diageo PLC has agreed to purchase Chalone Wine Group Ltd. for $260 million, increasing the company's stake in California wine making.

The deal comes after Chalone terminated a merger agreement with Domaines Barons de Rothschild, according to news reports.

The deal is expected to close in the first quarter of next year.

Diageo, based in London, is the maker of Guinness beer and Smirnoff vodka. Diageo owns Napa Valley wineries Beaulieu Vineyard and Sterling Vineyards.

Chalone is also based in Napa Valley and specializes in the making and marketing of premium wines from select vineyards throughout California. The company reported $67.4 million in sales for the year ended Dec. 31, 2003.