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Saturday 23 August 2014

Treasury rejects US takeover bid

20th May, 2014 by Rupert Millar

Troubled wine group Treasury Wine Estates has dismissed a bid from US equity firm, Kohlberg Kravis Roberts (KKR), worth just over AU$3 billion.

treasury_wine_estatesAccording to the Sydney Morning Herald, KKR was offering $4.70 a share for the Australian wine group behind Penfolds and which also has several major US brands in its portfolio.

However TWE rejected the bid saying it did “not properly value the company”. Early trade shares shot up over 18% on Tuesday morning to $4.83 in the wake of the news.

TWE confirmed that KKR had first put in its bid on 16 April but had requested anonymity until the board came to a decision.

TWE said in a statement that the decision not to accept the offer was due to following new chief executive, Michael Clarke’s, long-term plan.

It said: “Since commencing as TWE’s chief executive officer, on 31 March, Michael Clarke has been progressing with plans to improve the company’s performance, with a focus on improving brand prioritisation and investment, addressing structural challenge facing the business and reducing overhead costs.

“While these plans may drive potential asset impairments, they are fundamental to a turnaround in TWE’s short term performance and the company’s ambitions to deliver long-term sustainable growth.

“The board has considered the KKR proposal in the context of these renewed plans and concluded that the proposal does not reflect the fundamental value of the company and it is therefore not in the best interests of shareholders.”

Just last week TWE had to deny that Pernod Ricard was a potential buyer. The beleaguered group has already been propped up by a US fund manager buying AU$25m worth of shares, while Clarke has admitted that the US brands including Beringer may have to go to put the group back into profit.

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