€2.35bn offer may spark bidding war for wine giant

Australia’s Treasury Wine Estates is opening its books to Kohlberg Kravis Roberts after the private equity giant hiked its takeover offer to $3.15bn (€2.35bn), raising the prospect of a bidding war for the world’s second biggest winemaker.

€2.35bn offer may spark bidding war for   wine giant

Treasury, which rejected a $2.9bn unsolicited bid from Kohlberg Kravis Roberts in April, said that the 10.6% rise in the offer price meant it was now “in the interests of shareholders to engage further.”

Asia’s growing appetite for wine, the value of Treasury’s Penfolds label, and an ongoing restructuring are helping turn perceptions of the company’s prospects around after a horror 2013 saw profits slump 38% in the six months to February.

China’s Bright Food Group, France’s Pernod Ricard and the world’s biggest winemaker, US-based Constellation Brands, have all been mooted as potential buyers of Treasury.

“Absolutely there are (rival bidders), they’ve now kind of set a starting point for the price,” said Shannon Rivkin, director at Rivkin Securities.

“This is going to be the point now where anyone who has any interest will be able to have a look at the books as well.”

Treasury, which also owns the Wolf Blass and Beringer brands, stressed it was providing Kohlberg Kravis Roberts and new bidding partner Rhone with “non-exclusive” access to its books for due diligence and that there was no certainty any offer would be forthcoming.

Treasury rejected Kohlberg Kravis Roberts A$4.70 (€3.26) per share bid as too low in May after Kohlberg Kravis Roberts began approaching investors directly.

The new A$5.20 offer is a 5% premium to Treasury’s A$4.95 share price close on Friday.

Treasury’s shares have fallen from an all-time high of A$6.43 a year ago amid slashed earnings forecasts, oversupply problems in its US arm and sluggish sales in China.

If a firm offer did result, Treasury said it would assess whether it provided superior value to plans the company already had to cut costs and improve its performance, which included separating its Australian luxury and mass prestige portfolio from its lower value commercial brand portfolio.

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