Accolade Wines, Australian Vintage tie-up on the grapevine

Australian Vintage has a $28m market value, and its shareholders have been searching for an exit.

Almost a year after the private equity-backed Accolade Wines purchased Pernod Ricard assets, there is speculation about attempts to revisit a potential backdoor listing of the business into Australian Vintage.

Australian Vintage has a $28m market value, and its shareholders have been searching for an exit.

One way this could happen is if it becomes a bigger business, creating more liquidity and the opportunity for investors to sell.

Market experts believe that consolidation in the wine market makes sense, and companies need to be brought together to gain cost efficiencies at a time when the market has suffered from an oversupply of middle market wine production.

A deal would come after Australian Vintage last month appointed chief commercial officer Tom Dusseldorp as its next chief executive to replace outgoing boss Craig Garvin.

Mr Dusseldorp said the group’s objective was to manage capital efficiently and improve its ability to invest, manage risk and respond to opportunities through cost discipline.

It would be plausible that Mr Dusseldorp would consider a merger between Australian Vintage and Accolade Wines, because he knows the former well.

He worked at Pernod Ricard for more than a decade and Australian childcare company Camp Australia, which was previously owned by Bain Capital, the private equity group that now leads a consortium that owns Accolade Wines.

A deal to bring the two companies together could turn Australian Vintage into a $1bn-plus listed business, and it would be one way for Bain to stage an exit of Accolade Wines (recently renamed Vinarchy) when the market is effectively shut for initial public offerings.

Australian Vintage’s investors would need to be behind a transaction, which may require a capital raising.

One challenge is that the share price of Australian Vintage’s competitor, Treasury Wine Estates, is down about 25 per cent in the past year, as consumer stocks are hard hit in the soft economic environment.

Also hurting the wine industry has been soaring inflation in shipping and bottling costs and labour shortages, as well as oversupply.

DataRoom revealed last year that Australian Vintage was in talks about a backdoor listing of Accolade Wines into the business, but later said the discussions had failed to eventuate in a transaction.

Instead, Accolade went on to buy the Australia, New Zealand and Spain business of Pernod ­Ricard that includes labels such as Jacob’s Creek and New Zealand’s Brandacott Estate in a deal worth no more than $100m.

Accolade Wines had been owned by The Carlyle Group, but was taken over by a Bain Capital-led lending syndicate that recapitalised the business.

It was bought for about $1bn at a time when debt was far cheaper in 2018.

Accolade (Vinarchy) is one of the largest wine companies in the world, producing brands such as Hardys, St Hallett and Grant Burge and has renegotiated new contracts with growers.

This week, it announced the appointment of former PepsiCo executive Danny Celoni as its new CEO.

E&P Corporate Advisory has previously been working for Australian Vintage, which has a market value of about $90m and has brands including Tempus Two and McGuigan.