Takeover offers valuing Treasury Wine Estates at A$3.2bn have collapsed, leaving the Penfolds and Wolf Blass owner's current leadership to find a way to improve financial results.

Treasury‘s share price on the Australian stock exchange plunged after it announced that the two takeover offers it had received would go no further. The group’s shares finished Monday (29 September) at A$4.5 each, down by nearly 9% for the day.

The development leaves Treasury’s board of directors with the task of rejuvenating the wine firm, which reported a net loss of A$100.9m in its last financial year. Commenting on whether takeover talks were likely to resume, Treasury’s chief executive, Michael Clarke, told journalists, ‘I think it is over’.

For more than a month, Treasury allowed two teams of private equity investors to conduct due diligence on its accounts.

A consortium of KKR and Rhone Capital was granted access to Treasury’s book-keeping after offering $5.2 per share to acquire the wine group. Treasury also allowed a third undisclosed investor – reported to be TPG Capital – to analyse its financial health after launching a rival offer at the same price.

There was never any guarantee of a formal bid ensuing and Treasury said this week that talks with the private equity parties broke down over the weekend.

Treasury said most of the shareholders it polled had derided the offer price as too cheap.

It said the private equity firms could not meet the company’s price expectations. It also sought to reassure the market that the private equity investors ‘did not identify any major concerns with the business’, during their due diligence.

As part of a plan to improve sales and profits, Treasury has brought forward the 2010 vintage release of its Icon and Luxury Wines, including Penfolds Grange, to October. The 2009 wines were only released in May.

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Written by Chris Mercer