Constellation Brands has agreed to revise its previously announced agreement with E&J Gallo Winery (Gallo) in a bid to alleviate regulatory concerns.

The original agreement, signed in April, involved the sale of 30 wine and spirits brands to E&J Gallo Winery for $1.7bn.

The revised deal, which will supersede the earlier version, significantly reduces the scope of the acquisition and trims the deal value by nearly $600m.

Under the latest agreement, Constellation-owned brands such as Cook’s California Champagne, Paul Masson Grande Amber Brandy and J Roget American Champagne will not be part of the transaction.

The adjusted value of the transaction now stands nearly $1.1bn. It includes a $250m earnout provision based on divested brands’ performance over two years after closing.

In a separate statement, Gallo also confirmed the amendments in terms of the agreement.

Constellation Brands president and CEO Bill Newlands said: “We remain confident in our wine and spirits transformation strategy and we are committed to continuing to work with Gallo and the FTC to finalise this transaction.

“We continue to focus our total portfolio to align with consumer-led premiumisation trends and growing segments of the market.

“We believe pursuing a revised agreement is in the best interest of the brands, our collective employees, business partners and consumers.”

The revised deal is expected to close by the end of fiscal 2020, subject to Federal Trade Commission approval.

Separately, Constellation signed another agreement with Gallo to sell its New Zealand-based Nobilo Wine brand and associated assets for $130m.

The transaction is expected to close in the first half of fiscal 2021, subject to regulatory approvals.

The American beer, wine and spirits manufacturer also notes that it will continue to pursue divestment opportunities to sell its other brands as part of its transformation strategy.