By James Atkinson
Global investment firm Kohlberg Kravis Roberts (KKR) has together with Rhône Capital revised its proposal to acquire Treasury Wine Estates (TWE), which has this time granted the suitors the opportunity to conduct non-exclusive due diligence on their target.
TWE this morning announced it has received the proposal to acquire all of its shares at a price of $5.20, which represents a 50 cent increase on April’s $4.70 per share proposal by KKR, which the TWE Board rejected.
“The Board of TWE, together with its advisers, has concluded, based on the revised proposal, that it is in the interests of its shareholders to engage further with KKR and Rhône,” the company said.
The proposal remains subject to several conditions, including completion of due diligence to KKR’s and Rhône’s satisfaction, availability of financing and unanimous recommendation by the Board of TWE for the transaction.
The winemaker said that if an offer does result, the Board will assess whether it delivers a value proposition that is superior to the expected benefits from management’s renewed strategic plans to:
- Increase and accelerate consumer marketing investment in the company’s brands;
- Continue to drive efficiencies and improve the company’s cost base; and
- Address structural opportunities by focusing on commercial brands separately from the luxury and masstige portfolio in Australia.
“The Board of TWE notes that there is no certainty that the proposed transaction will result in an offer for the Company,” TWE said.
So, who next will grab the poisoned chalice. One would think by now that the message is loud and clear that big wine companies find great difficulty returning a dividend to shareholders. Better the company be split and sold off to real wine people.