Treasury Wines enters final talks

TWO private equity groups are thought to be preparing separate $3 billion-plus bids.

TREASURY Wine Estates was last night believed to have been holding final talks with two private equity groups over plans to submit separate $3 billion-plus bids to acquire the business.

Treasury Wines’ stable includes the iconic Penfolds, Wolf Blass and Beringer brands.

Private equity partners Kohlberg Kravis Roberts and Rhone Capital in May tabled an informal offer for the winemaker.

In August, US private equity investor TPG followed with its own non-binding offer.

TPG matched the indicative KKR-Rhone offer of $5.20 a share after the TWE board agreed to open its accounts to due diligence. KKR initially offered $4.70 a share, but was rebuffed by the board.

Due diligence typically takes about eight weeks to complete, but TWE had pushed the bidders to complete their scrutiny within six weeks, potentially paving the way for a deal to be agreed by the end of this month.

A spokesman last night declined to comment.

Any offer is expected to be based on a scheme of arrangement, which would require the support of at least 50 per cent of shareholders with at least 75 per cent of the company’s stock.

TWE last month reported a net loss of $100.9 million after tax for the past financial year, down from the $47.2m profit recorded a year earlier, after $281m in one-off expenses including asset writedowns on its US division.

Analysts have suggested the writedowns — the latest in a string of asset writedowns totalling more than $3.3bn over the past 10 years — could prompt the bidders to lower their offer price if they decide to proceed with the acquisition.

TWE shares yesterday closed up 1 cent at $4.92 in a sharply lower market.