Treasury Wine Estates (Australia)

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Treasury Wine Estates is one of the world's biggest premium wine companies, concentrating primarily on New World wines from Australia, New Zealand and California. Brands include Penfolds, Lindemans, Wolf Blass and Beringer. The business was formed from the merger of the former Beringer Blass and Southcorp wine businesses under the ownership of what was originally Australia's Foster's Group. A series of financial problems in the latter half of the 2000s prompted Foster's to spin off the business as an independent company in 2011. Life since then has remained challenging, and a series of apparently unsolicited approaches from potential buyers prompted TWE finally to put itself up for sale in August 2014. No deal was concluded and the group remains independent. Performance slowly improved under new CEO Michael Clarke and TWE bolstered its portfolio with the acquisition of Diageo's wine brands in 2015.

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Treasury Wine Estates website

Brands

Lindemans Rosemount
Wolf Blass Jamiesons Run
Penfolds Wynns Coonawarra
Matua Valley Beringer
Stag's Leap Chateau St Jean
Etude Wines Castello di Gabbiano

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 18th Aug 2016: Treasury Wine Estates, the world's biggest quoted pure-play wine company, enjoyed a strong rebound after a few tough years in the early 2010s. Brands include Penfolds, Lindemans and Beringer. Performance was boosted by the bolt-on of most of Diageo's wine portfolio last October, led by Blossom Hill. Net sales for the year to June jumped 20% to A$2.23bn (around US$1.6bn), helped considerably by currencies. (At constant rates the increase was a still-impressive 13%). Net profit more than doubled to A$180m

Adbrands Weekly Update 15th Oct 2015: Diageo sealed a deal to transfer the bulk of its wine operations to Treasury Wine Estates of Australia in a deal worth around $600m in cash and assumed debt. The sale includes US wineries Sterling Vineyards, Rosenblum Cellars, Beaulieu and Blossom Hill, among others, and the UK-based Percy Fox distribution division. The only significant exclusions from the sale are the US-based Chalone brand and Acacia winery, Navarro Correas in Argentina, and the group's various regional wine merchant businesses, such as Justerini & Brooks in the UK. TWE is best-known for its Penfolds and Lindemans brands. CEO Michael Clarke said the deal will significantly increase the group's premium wine portfolio, but he also suggested it might ultimately divest lower-priced brands.

Adbrands Weekly Update 2nd Oct 2014: In an unexpected development, Treasury Wine Estates, owner of Beringer and Penfolds among other New World labels, has ended sale talks with rival suitors KKR and TPG Capital following consultation with its investors, and will instead press ahead with its existing turnaround plan. "Throughout the due diligence process," said the company, "the private equity bidders indicated support for management's strategic plans and roadmap. They also did not identify any major concerns with the business. However, it is now apparent to the Company that the bidders are not able to support a transaction on terms and at a price acceptable to the board."  A key stumbling block was the amount of debt that both private equity firms would have loaded onto Treasury.

Adbrands Weekly Update 28th Aug 2014: Treasury Wine Estates reported results for the year to June. Revenues were A$1.71bn (approx US$1.56bn), up 1% on a reported basis, but down 5% at constant currency rates. The owner of brands including Penfolds and Beringer reported a net loss of A$101m as a result of A$281m of asset impairment charges against overstocks, mainly in the US. EBIT excluding charges slumped 15% to A$185m.

Adbrands Weekly Update 14th Aug 2014: A second bidder emerged for Treasury Wine Estates, owner of Penfolds and Beringer among other brands. The group is already in talks with a consortium comprising KKR and Rhone Capital, but it confirmed a separate approach from an unnamed bidder, widely rumoured to be TPG Capital, itself a former owner of the Beringer wine business. Both bids are priced at A$5.20 per share. Treasury's board said it would evaluate the twin offers against its own turnaround plans under newly appointed CEO Michael Clarke.


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Background

Free for all users | see full profile for current activities: Foster's Group took its first steps into the wine business in 1996, acquiring local group Mildara Blass. The first Mildara winery had been established in Australia in 1888, the same year that the Foster brothers developed their first beer. It had merged in 1991 with the much more recently established Wolf Blass wines, launched in the mid 1960s in the Barossa valley. Following acquisition of Mildara Blass, Foster's continued to expand its wine operations at home, while also acquiring interests in Chile and US. In 2000, it acquired US-based Beringer Estates for A$3bn. 

In early 2005 Foster's surprised the market by acquiring a 19% stake in rival wine group Southcorp, owner of the Penfolds, Lindemans and Rosemount estates, from Rosemount's founding family. A few days later the company announced a A$3.1bn offer to acquire the remaining shares. Southcorp was quick to announce that it considered the offer inadequate. With its share price soaring on the back of the hostile bid, Southcorp countered instead with a cheeky offer to buy out Foster's wine division. A revised offer from Foster's of A$3.17bn was accepted by Southcorp's board in April 2005. The acquisition doubled the size of Foster’s global wine business to around 39m cases a year, making it the world #1 in premium wine, as well as the only Australian consumer goods group with a #1 global position. 

However the large amount of debt accumulated in its wine buying spree began to create significant problems for the group during 2008, creating the possibility that the wine business could be sold off altogether. These troubles were exacerbated by over-supply of Australian and New Zealand wines in key American and European markets, as well as a general decline in demand prompted by the economic downturn. After a strategic review, the group pruned its portfolio to eliminate more than 30 non-core vineyards and their associated wines. In 2010, the group announced plans to spin off its wine division as an independent company. That process was completed in May 2011. See full profile for current activities


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