Australian Vintage has sacked CEO Craig Garvin, but he is now considering legal options

A major shareholder has labelled Craig Garvin’s sudden dismissal ‘bewildering’ and is demanding answers from the board.

Craig Garvin is considering his legal options after being sacked as CEO of Australian Vintage, owner of McGuigan wine.

The sacked chief executive of Australian Vintage, Craig Garvin, is considering his legal options over his sudden and shock termination from the company that makes McGuigan wine, and which could now ruin merger talks with Accolade Wines.

The move could also spark a shareholder civil war within the company as major investors take sides in the simmering boardroom dispute.

The sacking has already opened fresh wounds for the embattled Australian Vintage just at a time when it is in delicate negotiations to merge with the nation’s second largest winemaker Accolade Wines – with investors pinning their hopes on a merger deal after years of financial disappointments from the McGuigan winemaker. Accolade’s portfolio includes blockbuster wines such as Hardys, St Hallett, Grant Burge and Petaluma.

But with Mr Garvin sacked on Friday and the company giving little information on the reasons - other than an allegation of improper conduct at work - the merger deal with Accolade Wines could now collapse, leaving the smaller Australian Vintage struggling to survive in an increasingly tough wine market.

It is believed that Mr Garvin has the support of some of Australian Vintage’s largest shareholders including its biggest investor, funds manager Allan Gray which holds a 17.4 per cent stake, as well as some other institutional shareholders who have been similarly shocked by his sudden sacking. A spokesman for Allan Gray was unavailable for comment.

On Sunday one of Australian Vintage’s key institutional investors registered its grave concerns and anger over the dismissal of Mr Garvin, calling it “bewildering”, and said it feared the backdoor merger of Accolade Wines into Australian Vintage could collapse completely as Mr Garvin was seen as the likely leader of the combined wine group.

“We are extremely disappointed that it has come to this from the board and timing quite frankly is not ideal, it is bewildering,” said Oscar Oberg, lead portfolio manager of WAM Capital.

WAM holds just under 5 per cent of Australian Vintage and Mr Oberg said he was “in the dark” over the reasons for Mr Garvin’s departure.

Australian Vintage, the maker of McGuigan wines, has sacked its CEO Craig Garvin for improper behaviour.

“The announcement on Friday was very vague. It is bewildering. We are very supportive of Craig and he has been doing a really good job, we have been supportive of him since he took on the CEO job in what has been a challenging market.”

There is speculation the sudden departure of Mr Garvin might be linked to merger talks with winemaker Accolade Wines. Mr Garvin was understood to be heavily driving the merger deal and pushing for it to go ahead as soon as possible.

Mr Garvin is believed to be considering his legal options against the Australian Vintage company and its board, who released a statement to the sharemarket late on Friday announcing his termination as CEO, effectively immediately, and saying that the reason for his departure was over improper behaviour.

“After careful consideration and discussion between Mr Garvey in and the board, the board has terminated Mr Garvin’s employment for engaging in conduct that, in its view, displayed a lack of judgement and was inconsistent with the values of the company and the high standards expected of its chief executive officer,” the company said.

Australian Vintage did settle some months ago a complaint from a staff member, The Australian can reveal, and many of the parties involved in that workplace dispute believed the matter was settled. However, Mr Garvin was then sacked and it is understood he is considering legal action.

Mr Garvin was unavailable for comment on Sunday.

It can be revealed by The Australian that the decision to terminate Mr Garvin’s employment as CEO was a unanimous decision by the board and that Mr Garvin’s “lack of judgement” had nothing to do with any financial issues.

Mr Garvin will be replaced by current Australian Vintage non-executive director Peter Perrin who has 40 years executive experience in the wine industry. He will serve as acting CEO while the company undertakes a global search for Mr Garvin’s replacement.

Mr Garvin had led Australian Vintage since late November and before that was the local CEO of Italian dairy giant Parmalat for almost 10 years and previously had held leadership and executive positions at Tabcorp - where he was the boss of Star City casino - food group Campbell Arnotts and brewer Lion Nathan.

“The board thanks Craig for his service to the company over the past four years, and the contributions he has made to the business over that time,” Australian Vintage said in an ASX statement.

“While we are disappointed by the circumstances leading to his departure, we believe this decision is in the best interests of the company and its stakeholders. The board remains committed to upholding the highest standards of conduct and accountability for all employees, including senior leadership.”

Mr Garvin previously worked for food group Campbell Arnott’s.

Australian Vintage, which also owns the Tempus Two and Nepenthe brands, will pay Mr Garvin his accrued entitlements and he will receive payment in lieu of his six-month notice period in accordance with his employment contract.

The unvested performance rights held by Mr Garvin as at the termination of his employment will lapse. However, the 562,705 shares currently held in trust under escrow will be released from escrow and transferred to Mr Garvin, the company said.

Australian Vintage, formerly known as McGuigan Wines, has had a troubled few years that has included boardroom reshuffles, losses, poor vintages and a collapsing share price (the stock is down 95 per cent since its highs in 2005) to make it vulnerable to takeover.

Its biggest brand is McGuigan, and the company has also formed a number of high-profile collaborations including launching two years ago a new low alcohol selection of wines under the Sevenly brand owned by Sarah Jessica Parker, the star of US TV show ‘Sex and the City’.

The sacking of its CEO comes just as the company’s board, led by chairman Richard Davis, is discussing a potential merger with the similarly struggling Accolade Wines.

The winemaker said Mr Garvin’s departure would not impact those talks.

“The departure of Mr Garvin should have no impact on the preliminary discussions between Australian Vintage and Accolade Wines on a potential transaction … these discussions are continuing, although there remains no certainty that any transaction will eventuate.”

An extensive global search process has commenced to appoint a permanent CEO, Australian Vintage said.

But larger investors now fear with Mr Garvin gone it will scuttle the merger discussions and Accolade Wines will look instead for another merger partner that is more settled and without a potentially brewing shareholder revolt.

Originally published as Australian Vintage has sacked CEO Craig Garvin, but he is now considering legal options