(Weeklytimesnow) - TREASURY Wine Estates will buy most of the US and UK wine operations from drinks giant Diageo for $830 million.

This acquisition will include a cash payment of $754 million and the assumption of capitalised leases worth $66 million.

Diageo Wine is a leading player in the US luxury wine market, owning a collection of iconic wine brands based in the famous wine region of Napa, California.

Brands include Beaulieu Vineyards, Sterling Vineyards, Acacia and Provenance and Hewitt.

TWE will also acquire the Blossom Hill wine brand in the UK — one of the nation’s leading wine brands.

TWE also announced an improved financial outlook, based on acceleration in TWE’s stand-alone sales and earnings performance in the first quarter of 2015-16.

The growth is expected to continue for the rest of the year, with end of year earnings (EBITS) to be about $270 million — 290 million, prior to the impact of the acquisition.

The acquisition is expected to immediately double TWE’s net sales revenue for its American luxury and “masstige” wines, allowing TWE to speed up its continental brand growth in the US, Canada and Latin America.

In the first full year of trading after the acquisition, TWE expects that about 75 per cent of gross profit from the Diageo Wine business will be luxury and masstige.

TWE chief executive Michael Clarke said the acquisition would transform TWE into a larger player in the luxury wine sector.

“The additional supply of luxury and masstige wine will be a game-changer for our US brands, providing us with an immediate opportunity to stepchange our growth in the US, Canada, Asia and Latin America,” Mr Clarke said.