Treasury Wine, KKR put dance on hold

THE delicate dance between suitor, private equity giant KKR, and target, Treasury Wine Estates, has been interrupted with mutual recriminations over the stymied $3.05 billion deal.

In a conference call with analysts and reporters on Tuesday, Treasury Wine chief executive Mike Clarke said an unidentified KKR adviser had breached a confidentiality agreement by talking to one or more of TWE shareholders about KKR’s $4.70 a share takeover offer, made on April 16.

The adviser’s actions, says Mr Clarke, forced the company to disclose the KKR takeover offer to the Australian Securities Exchange. More importantly, the adviser’s discussions put an abrupt end to negotiations between KKR and TWE on a potential deal — although that may prove temporary.

KKR declined to identify the adviser. In a statement emailed to Data Room, KKR said it was not in breach of any confidentiality agreement.

“KKR has not executed a non-disclosure agreement with Treasury Wine Estates and access to company records per our requests has not been provided,” the statement said. “In the last week, KKR’s advisers held discussions with certain shareholders of Treasury Wine Estates on a wall-crossed, confidential basis and subject to appropriate confidentiality protocols.”

Nomura is the investment bank advising KKR, while Goldman Sachs is advising Treasury Wine Estates.

Under Australian law, non-binding, indicative proposals of the type that KKR made to TWE do not have to be disclosed.

But such proposals are sometimes disclosed if companies believe they should adhere to a regime of continuous disclosure or if they simply want to interest other potential acquirers, to lure a better takeover price. Some companies may disclose non-binding, indicative takeover offers as they believe such proposals cannot be kept confidential.

“Non-binding, indicative proposals are situations where people are engaged in a very delicate dance,” says a partner at a major corporate law firm. “Bidders and target often see things in different ways.”