Treasury Wine Estates shares spike on takeover talk

Pernod Ricard, owner of brands such as Chivas Regal and Absolut Vodka, has been rumoured as a potential suitor for Treasury Wine.

Last month Treasury Wine revealed plans for a three-way structural split of its global winemaking operations.

Shares in Treasury Wine Estates spiked almost 10 per cent in morning trade on Monday after reports in the British press that French drinks giant Pernod Ricard, owner of brands such as Chivas Regal and Absolut Vodka, could be mulling a £5bn ($9bn) takeover for the Australian winemaker.

The speculation of a bid comes as recently appointed Treasury Wine chief executive Tim Ford scrambles to fill the massive earnings hole created by the imposition of crushing tariffs for all wine exported to China, as he also pushes through a three-way structural split of the wine company.

Treasury Wine, owner of wine brands like Penfolds, Wolf Blass and Beringer, hit a high of $11.29 on Monday before closing up 66c, or 6.4 per cent, at $10.97. The rally was triggered by reports in the British press that the French giant Pernod Ricard had been working on a multi-million dollar bid for Treasury Wine.

Pernod Ricard, France’s biggest drinks company, has a large stable of beverages although it is weighted towards the spirits category with the brands under its ownership including Chivas Regal, Absolut, Malibu, Beefeater, Havana Club and Jameson. It does have a smaller collection of wines that take in Perrier-Jouet, Brancott Estate and the Australian juggernaut wine Jacob’s Creek.

Both Pernod Ricard and Treasury Wine have declined to comment on the takeover speculation.

“Treasury Wine Estates does not comment on rumour or speculation,” a Treasury Wine spokeswoman said.

Last month Treasury Wine chief executive Mr Ford revealed plans for a three-way structural split of its global winemaking operations, with an earlier plan to spin off and demerge its luxury brand Penfolds shelved. A new structure from July will be formed around its luxury brand Penfolds, a premium-to-commercial division called Treasury Premium Brands and a third division called Treasury Americas.

The decision to structurally split the company might have triggered further interest in the group by takeover suitors who are looking to pounce on the wine group and break it up themselves, plucking out key assets and selling off others.

It comes as Treasury Wine has suffered the loss of its highly profitable Chinese export business following Beijing’s decision in November to impose crushing 200-per cent plus tariffs on exported Australian wine.

The weight of the Chinese tariffs imposed from November on all Australian winemakers, disruption from COVID-19 and lost trade from shuttered restaurants and bars crunched Treasury Wine’s half-year profits by almost half to show net profit down 42.8 per cent to $120.9m. Revenue slipped by 8.2 per cent to $1.42bn for the December half.