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Treasury Wine Estates facing billion-dollar bidding war

Penfolds and Rosemount owner Treasury Wine Estates could soon be at the centre of a bidding war after attracting a second offer to buy the company.

Following the A$3.4bn joint bid by private equity groups Kohlberg Kravis Roberts (KKR) and Rhône Capital last week, the company said another unnamed ‘global private equity investor’ had matched the bid, which values Treasury at A$5.20 a share.

Reports in the US named the new bidder as TPG Capital, the group which sold California’s Beringer Vineyards to Foster’s Group (Treasury’s former owner) for US$1.5bn in 2000.

As with the KKR/Rhône proposal, Treasury said it would open its books to allow the new bidder to conduct ‘non-exclusive due diligence’ on the group.

‘The proposal is subject to due diligence and conditional on a number of other matters equivalent to the previously announced proposal,’ Treasury said.

‘The board of TWE reiterates that there is no certainty that any proposal will result in an offer for the company.’

Last week’s offer from KKR and Rhône represents an increase on KKR’s earlier A$4.70 per share bid which was tabled – and rejected by Treasury – in April.

The company, which also owns Wolf Blass and Lindeman’s, has been embroiled in takeover speculation for the past few years.

If both bidders walk away, Treasury will pursue its own turnaround strategy of increasing marketing spend on its brands, cutting costs and splitting its commercial and luxury/masstige wines (the latter meaning premium wines with high volumes).

Treasury has been hit in recent years by falling profits and substantial write-offs related to excess wine stocks, especially in the US.

Written by Richard Woodard

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