KKR, Rhône make renewed $3.15b offer for Australia wine-maker

According to a stock market disclosure, the revised, non-binging proposal is to acquire all shares in the Melbourne-headquartered wine maker for A$5.20 cash per share. This represents an A$0.50 - or 10.6% - increase on the A$4.70 per share KKR originally offered to pay.

It also reflects a 40.9% premium on the closing share price of A$3.69 on April 15 - shortly before KKR made its offer - and a 5% premium on the firm's A$4.95 closing price on Friday.

The sweetened offer has opened the possibility of a bidding war for the wine maker which is famous for brands like Penfolds, Wolfblass and Beringer. China's Bright Food Group, French wine giant Pernod Ricard and US-based Constellation Brands have all been named as potential buyers for business.

Treasury - which rejected KKR's earlier unsolicited offer on the basis it was too low - said the 10.6% in the offer price meant it was "in the interests of shareholders to engage further." The company added that it will provided KKR and Rhone with non-exclusive access to its books for due diligence.

Shares in Treasury are down from an all-time high of A$6.43 a year ago in wake of slashed earnings forecasts, oversupply problems in its US arm and poor sales in China.

The company has been in the process of cutting costs and improving its performance in order to avoid a takeover. It recently installed new CEO Michael Clarke, who is overseeing an efficiency drive expected to generate A$35 million in savings in the 2015 financial year.

Treasury 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.

With roots that go back to the establishment of Penfolds in the mid-1840s and the founding of Beringer Vineyards in 1876, Treasury 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. Treasury 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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