Treasury Wine Estates to settle $65m class action

The Australian wine heavyweight has reached an in-principle agreement to settle a shareholder class action dating back to 2020.

Australian wine heavyweight Treasury Wine Estates has reached an agreement to settle a $65 million class action with shareholders dating back to 2020.

In a release to the Australian Stock Exchange on Monday, TWE said the settlement was “no admission of liability” and the decision was made in the best interests of shareholders to let the company “remain focused on executing against its strategy”.

The class action proceedings came after allegations TWE engaged in misleading or deceptive conduct.

The allegations related to an announcement on January 28, 2020, when TWE downgraded its 2020 earnings growth forecast from 15-20 per cent down to 5-10 per cent, as well as reporting a decline in American earnings.

TWE’s share price plummeted more than 20 per cent in late January as a result.

Maurice Blackburn, which is representing the plaintiffs along with Slater and Gordon, said TWE failed to disclose problems associated with the business to shareholders at an earlier time.

“From at least June 30, 2018 to January 28, 2020, Treasury’s US performance was in decline with diminishing sales, a weak US brand portfolio overall and slowing growth of its key brand 19 Crimes, added to which were unsustainable levels of inventory held by its distributors,” Maurice Blackburn class actions principal Miranda Nagy said in May 2020.

“It also did not correct many representations from earlier years that it had ‘reset’ the US business in FY2015.”

The class action was brought by shareholders who acquired interest in TWE’s fully paid ordinary shares between June 30, 2018 and January 28, 2020.

The settlement is subject Supreme Court of Victoria approval.

It comes after another class action against TWE in 2017, which resulted in a $49 million settlement in favour of shareholders.