(Fool) - As early as this fall, beer, wine, and spirits manufacturer and marketer Constellation Brands, Inc. (NYSE:STZ) may spin off its Canadian wine business in an initial public offering on the Toronto Stock Exchange. Bloomberg News, which reported the details on a move management had previously disclosed it was considering, reports that the IPO could be worth $1 billion in Canadian dollars, or about $787 million at current exchange rates.

If the executive suite does end up greenlighting the spin-off, some shareholders may wonder about the rationale. In Constellation's fiscal 2016 annual report, filed in April, the company reaffirmed its self-description as the "the leading wine company" in Canada, as it owns eight of the top 25 wine brands. The noted beverage giant lists among its impressive Canadian assets eight wineries spanning 1,700 total acres, one distillery, a production facility, and a distribution center.

Reviewing a bit of history may bring perspective to the proposed deal. The Canadian wine business was formed in 2006 upon Constellation's mid-year acquisition of Vincor International, Inc. In Constellation's first complete fiscal year of operating the new division, sales hit $449.8 million, which, at the time, accounted for nearly 12% of total company revenue of $3.78 billion. Significantly, the transaction enabled Constellation to pick up important brands that still enjoy appreciable market share today, including Jackson-Triggs and Inniskillin, the No. 1 wine and ice-wine labels in Canada, respectively.

Since the purchase, completed at a price of nearly $1.5 billion, the Canadian wine business has grown steadily, but not in dramatic fashion. Revenue peaked in fiscal 2014 at approximately $698 million. This past year, in part because of the U.S. dollar's strength against the Canadian dollar, the top line reached only $587.5 million. That's a compounded annual growth rate, or CAGR, of 3.5% over the past eight fiscal years. Today, given the recent acquisition of Mexican beer brands and the scaling up of Constellation's beer business, Canadian wine sales account for just under 9% of total annual revenue of $6.5 billion.