Treasury Wine settles shareholder class action, pays $65m

Maurice Blackburn Lawyers and Slater and Gordon have reached an in-principle agreement on behalf of the winemaker’s shareholders.

Treasury Wine Estates CEO Tim Ford. Picture: Aaron Francis

Treasury Wine Estates, the makers of Penfolds, Wolf Blass and Lindeman’s, has settled a class action lawsuit launched by law firms Maurice Blackburn Lawyers and Slater & Gordon, agreeing to pay $65m but with no admission of liability.

Maurice Blackburn and Slater and Gordon, on behalf of two plaintiffs (Steven Napier, and Brett Stallard as trustee for the Stallard Superannuation Fund), jointly conducted the class action in the Supreme Court of Victoria.

It was alleged that Treasury Wine engaged in misleading and deceptive conduct and breached its continuous disclosure obligations in the period from June 30, 2018 to January 38, 2020.

The shareholder class action centred on the winemaker’s declining performance in its Americas wine business since at least mid-2018.

It followed Treasury’s ASX announcement on January 28, 2020, downgrading its fiscal 2020 earnings growth forecast from 15-20 per cent to 5-10 per cent.

There was a significant market reaction to this announcement, with Treasury’s share price dropping by 25 per cent on January 29, 2020.

The downgrade was blamed by the company on a number of factors, including primarily underperformance in its US market in the first half, which was expected to continue through the second half, unexpected changes in its Americas leadership resulting in a loss of execution momentum through the first half, and the impact of changes in US wine market dynamics, where suppliers were trying to shift surplus wine across the market at lower prices, resulting in the accelerated growth of private label.

In particular, the class action alleged that from at least June 30, 2018 to January 28 2020, Treasury Wine’s US performance was in decline, and it was alleged that it failed to disclose this or to correct representations to the effect that the performance of the Americas division would strengthen and contribute to accelerated earnings growth.

Maurice Blackburn principal Julian Schimmel said the settlement was a significant outcome for shareholders.

“We are pleased with this outcome for shareholders on the eve of a trial listed for seven weeks and to have achieved that result without the need to endure further delay in following through with the court processes,” Mr Schimmel said.

“The settlement is another example of Australia’s class actions regimes operating to advance the interests of investors who claimed to have been misled by listed companies.”

The settlement is subject to court approval and Treasury Wine has made no admission of liability.

In a statement to the ASX Treasury Wine said the agreed settlement of $65m was inclusive of interest and costs.

The full settlement amount would be met by available insurance proceeds, the company said.

“The settlement is subject to the finalisation and execution of a deed of settlement,” it said.

“While Treasury Wine currently expects that this requirement will be satisfied, this is not certain to occur.

The settlement will also be conditional upon approval by the Supreme Court of Victoria.”

Shares in Treasury Wine closed up 18c at $12.29.

Originally published as Treasury Wine settles shareholder class action, pays $65m