Wine Giant Goes it Alone After Takeover Fails

Sep 30, 2014

(Wine-Searcher) - Treasury, the world's largest standalone wine producer, announces an end to takeover talks.

The long, slow dance between Treasury Wine Estates and two potential buyers is over, after the company said takeover talks with two global private equity groups had ended.

Treasury – which owns major brands including Penfolds, Wolf Blass and Beringer – last month said it had received non-binding proposals from Kohlberg Kravis Roberts and partner Rhone Capital, as well as an unnamed rival suitor. Both conditional proposals had suggested a price of A$5.20 (US$4.55) per share, which would have valued Treasury at close to A$3.4 billion.

"However, it is now apparent to the company that the bidders are not able to support a transaction on terms and at a price acceptable to the board," the company said in a statement.

Treasury said its major shareholders, whose combined holdings amounted to about 50 percent of shares, believed a price of A$5.20 per share undervalued the company.

The company's shares dropped more than 10 percent on the news, but recovered slightly to end the day down 42 cents, or 8.54 percent, at A$4.50 in a generally falling market.

Treasury chief executive Michael Clarke said he did not think the suitors would sweeten their offers.

"I think it's over [that] is my point of view," he said. "They just couldn't get their numbers to work."

Mr. Clarke added that one of the groups – which he didn't identify – had sought to lower its offer in view of potential regulatory hurdles that it expected to face in the U.S. The other bidder had wanted to considerably increase Treasury's debt levels – a move that would have skewed the value of the original offer, Mr. Clarke said. 

Treasury, which was spun off from Foster's beer business in 2011, has assets on three continents with more than 80 brands. However, poor sales of brands such as Beringer in the U.S. last year meant the company had to destroy six million bottles of wine that had passed their drink-by date. That alone saw the company take a A$155m hit.


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