Australia's Treasury Wines ends PE buyout talks

TWE - owner of brands such as Penfolds, Rosemount Estate and Wolf Blass - said in a regulatory filing that it had held discussions with shareholders representing approximately 50% of the total shares and "almost every one" had indicted the price of A$5.20 per share undervalued the company. The offer values TWE at A$3.37 billion ($3.15 billion).

The company's stock was down 8.54% at A$4.50 as of mid-afternoon trading on Monday.

TWE was initially subject to a bid of A$4.70 per share from KKR in April. The board rejected the offer, saying it didn't reflect the full value of the company. KKR returned with a revised offer in partnership with Rhône. The bid of A$5.20 represents a 40.9% premium to TWE's closing price on April 16, the day before KKR made its original proposal. TPG matched the offer in August.

TWE said that it shareholders believe more value can be created through the company's existing strategic plan to increase consumer marketing investment in the company's brands, drive efficiencies and improve the cost base, and address structural opportunities for mid-tier brands (priced at A$5-10 per bottle) as well as seek organic expansion for the existing higher-end portfolio.

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

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 reported a net loss of A$100.9 million for the 12 months ended June 2014, compared to a profit of A$47.2 million the previous year. The principal hit was a material item expense of A$384.5 million relating to an asset impairment charge and a restructuring provision. TWE has struggled with underperformance in the US - it scaled back much of its US inventory - and slower sales in China.

Sales revenue increased by 1% to reach A$1.71 billion, while EBITS narrowed from A$216.2 million to A$184.6 million.

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