Treasury Wine Estates remains “in play”, according to both investors and the investment bankers trying to interest private equity firms and beverage companies in acquiring the winemaker, reporting by Data Room has discovered.
Shares in the maker of Penfolds wine have soared 28 per cent since the company disclosed a $4.70 per share conditional takeover offer from buyout firm KKR on May 20. Yesterday the stock closed at $5.19 on the ASX, 49 cents above KKR’s offer. That indicates that investors are betting a higher offer than the US private equity giant’s will eventuate.
Nomura, KKR’s investment banking adviser, will not discuss whether KKR is considering a higher offer for Treasury Wine. KKR did not return a call or an email from Data Room seeking comment.
But other investment bankers over the past week have been contacting clients in Australia and overseas who may be eager to do a deal for a company that is struggling, in its own words, to address “structural challenges facing the business” while reducing overhead costs.
Treasury Wine’s earnings before interest, tax, SGARA and material items, a measure of cash flow before capital expenditure, fell 38 per cent to $45.8 million in the six months to December 31, 2013.
“Any competition to KKR is likely to come from private equity than trade,” says an investment banker who spoke on condition of anonymity.
Bankers would not discuss the names of clients potentially interested in making a takeover offer for Treasury Wine.
This month, the company denied media reports that it had held talks with two potential buyers of its US business: Constellation Brands, owner of Robert Mondavi winery and Kim Crawford wines; and France’s Pernod Ricard, owner of Perrier Jouet champagne.
The company says it remains open to takeover offers “but will not support a proposal which does not compensate shareholders sufficiently for the value of their shares,” as Treasury Wine chairman Paul Rayner said in a letter to shareholders. Such an offer may not be too long in coming.
