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Treasury ends takeover talks with KKR

Treasury Wine Estates has announced it has ceased its discussions with the American equity firm that had put forward a takeover bid.

treasury_wine_estatesUS firm Kohlberg Kravis Roberts (KKR) put forward a bid back in August along with Rhône Capital. Having first put forward a bid back in May, the August offer raised its original bid by 10% to AU$5.20 a share.

TWE said at the time it was going to put the proposal to shareholders but apparently the “clear feedback” from nearly all of the shareholders was that the price offered by KKR, “undervalued the company”.

A statement from TWE explained that: “This view is driven by the value that major shareholders, the Board and Management believe will be delivered over time through the Company’s strategic plans to: increase and accelerate consumer marketing investment in the company’s brands; change Penfolds release dates; deliver the significant overhead cost reduction program; deliver supply chain savings and efficiencies through a separate focus on the commercial portfolio versus the Luxury & Masstige portfolio in Australia and build improved momentum in the top line through stronger consumer, retailer and distributor relationships, enhanced marketing programs and a greater focus on the company’s priority brands.”

Chairman, Paul Rayner, said: “The Board’s focus continues to be to act in the best interests of all shareholders. Following the receipt of the initial, indicative proposals from the two parties, we believed it was in shareholders’ best interests to grant those parties the opportunity to conduct non-exclusive due diligence.

“That process has now concluded and the Board is confident in the strategic plans to grow the Company and is looking forward to working with Management to deliver value to its shareholders.”

Having rejected KKR’s bid, it is likely the company will also dismiss TPG Capital’s offer which matched the former in price per share.

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