Australia’s Treasury Wine Estates rejects KKR buyout offer

The private equity firm offered to pay A$4.70 per share for all outstanding shares, representing a premium of 27% to the closing price on April 15, the day before the bid was lodged. KKR added in a statement that it had held discussions with certain TWE shareholders.

Subsequent to the announcement, TWE's stock jumped nearly 18% on Tuesday to close at A$4.80. As of mid-afternoon trading on Wednesday, it had gained a further 6.1% to reach A$5.09.

The company said it considered the KKR offer in the context of new CEO Michael Clarke's plans to improve performance, with a focus on prioritizing key brands, addressing structural challenges and reducing overhead costs.

TWE reported a net profit of A$42.3 million in the 2013 financial year, down 52.9% year-on-year, while revenue increased by 4.8% to reach A$1.76 billion. The weak performance was largely due to scale back US inventory, incurring a pre-tax material item expense of A$154.2 million.

Net profit for the first half of the 2014 came to A$106.2 million, up 103.1% year-on-year, due to a one-off income tax benefit. The company scaled back its full-year EBITS projection to A$190-210 million from the previously stated A$230-250 million.

Since the start of the year, TWE has refuted claims that it has been approached by Pernod Ricard and Constellation Brands regarding the potential sale of its US business.

With roots that go back to the establishment of Penfolds in the mid-1840s and the founding of Beringer Vineyards in 1876, TWE claims to be the world's largest pure-play listed wine company with more than 80 brands in its portfolio.

The business was consolidated by Foster's in the mid-1990s and early 2000s and then spun off by its parent in 2011, prompting interest from several private equity suitors. Cerberus Capital Management had a $2.5 billion bid rejected and the company was subsequently taken public.

TWE owns 11,000 hectares of vineyards, employs 3,500 staff across 16 countries and sells 32 million cases of wine per year.

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• Topics
• Buyouts
• Australasia
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• Consumer
• Australia
• buyout
• KKR