Vinarchy could be seeking deal with Australian Vintage
The reshaping of Australia’s wine sector could be about to undergo yet another phase, if speculation in the country’s leading newspaper, The Australian, is to be believed.
It has been reported that Vinarchy, formerly Accolade wines, could be seeking a deal with Australian Vintage, the third largest producer, best known for the McGuigan label.
Neither company has commented.
The speculation centres around whether the international investors behind Vinarchy are already laying the grounds for a profitable exit from the company by taking over AV but retaining its Sydney stock market listing.
That would allow the public to buy shares in the enlarged group as the industry recovers from the disasters wrought by Covid and the three-year Chinese ban on Australian wine imports.
Stock market vision
The main objective of financial groups, such as the Bain consortium behind Vinarchy, is to improve the businesses they buy and then float them on a stock market or sell them at a profit through a takeover.
With a huge glut remaining in production, Australia has already seen a revolution in how the industry is structured.
Investment house Carlyle pulled the plug on its AU$1 billion investment in Accolade, which the Bain group and its allies then rescued.
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They then held extensive merger talks with Australian Vintage and, reports have it, were close to a marriage when Accolade suddenly bought Pernod Ricard’s extensive wine business in Australia, New Zealand and Spain, a deal which completed only last month.
As a result, Vinarchy currently oversees an annual sales turnover of over AU$1.5 billion and is responsible for employing more than 1,600 people worldwide.
New personnel
Both Vinarchy and Australian Vintage have recently appointed new chief executives. Former Diageo executive Danny Celoni will soon take over running Vinarchy, while Tom Dusseldorp is succeeding Craig Garvin at AV.
Garvin was the centre of controversy at AV when the company fired him during the merger talks with Accolade, only to reappoint him months later after the discussions failed.
A stumbling block to any takeover of AV would be its share price, which has tumbled by 25% in the past year.
Investors would want to recoup much of that lost ground, but Bain and its partners in Vinarchy are unlikely to want to pay a premium if a deal is to be done.
In such cases, existing shareholders are often compensated with bonus shares in the new entity.
In February, AV’s interim chairman, former investment fund manager James Williamson, bought 10.9 million shares in the group for AU$1.36 million (£680,000). At the time, he called it a “screaming buy.”
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