Subscriber login Close [x]
remember me
You are not logged in.

Private equity firm KKR ups bid for Treasury Wine Estates

Published:  04 August, 2014

Treasury Wine Estates has opened its books to private equity firm Kohlberg Kravis Roberts following its revised - 10% higher - offer of US$3.15 billion for the wine business.

Treasury Wine Estates has opened its books to private equity firm Kohlberg Kravis Roberts following its revised - 10% higher - offer of US$3.15 billion for the wine business.

Opening the books to US-based KKR and and Rhône Capital raises the prospects that other bidders may express an interest in the Australian-based business.

Treasury's board says it has received a revised offer from KKR for all of its shares at $5.20 per share - up from its earlier offer on April 16 of $4.70 per share - which was rejected by the Treasury board.

The board added if is "in the interests of shareholders" to engage further with KKR and Rhône given the increased bid, and has taken the decision to open its books to the firm to conduct "non-exclusive due dilligence".

The Board states that there is no certainty that the proposed transaction will result in an offer for the company. In fact, some analysts have pointed out that a closer look at the books is risky in that it could prompt concerns among potential buyers and result in a lower offer.

Nomura beverage analysts said despite the revised bid from KKR, it does not expect the major spirits companies to get involved. "Pernod has  5% of its profits coming from wine mainly to support the spirits business but has good geographical coverage including Australia and the US. The other major spirits companies have been net sellers of wine assets in recent years," Nomura said.

At the end of June Treasury wrote down AU$260 million for 2014 attributed to prices paid for pre-demerger acquisitions and the decline of entry-level wine globally. It said that 2015 would be a "reset year" for the company.

Chief executive Michael Clarke, who came on board in March, said the impairment "further highlights the need for TWE to do things differently". "The current business model is not being optimised and fails to reflect the company's outstanding capability, brands and people," he added.

The group, which owns Penfolds, Rosemount and Wolf Blass, announced a four-step plan to resuscitate Treasury's fortunes back in April. In a bid to stave off takeovers, the groups stated it had completed its fiscal 2014 plans, boosted consumer marketing and cut overheads for the fiscal year 2015 and was looking to "address structural opportunities for long-term sustainable growth".

Keywords: