Treasury to cull 5% of workforce

Struggling wine group Treasury Wine Estates is to cut around 5% of its global workforce in order to invest more heavily in marketing and promoting its brands.

The Sydney Morning Herald reports that the revenue the 175 job losses will generate, around AU$35m, will allow the company to up its marketing spend by 50%.

Treasury Wine Estates, which owns the likes of Penfolds and Wolf Blass, employs around 3,500 people worldwide.

Chief executive officer Michael Clarke told analysts this week that the extra marketing funds will be allocated to the company’s international brands.

The announcement comes on the back of TWE rejecting a takeover bid by investment firm Kholberg Kravis Roberts on Tuesday, which offered to pay $4.70 a share, valuing the company at $3.05 billion.

TWE refused the bid saying it did “not properly value the company”.

The company’s share price shot up over 18% on Tuesday morning to $4.83 in the wake of the news.

Last week TWE publically denied 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.