By Andy Young
Treasury Wine Estates has sold its US Asti Winery, Souverain brand, inventory and vineyard assets to E.&J. Gallo Winery.
Although the full sale price has not been disclosed, Treasury said in a statement to the ASX that the deal will see a pre-tax loss of approximately US$7.5 million.
In 2014 Treasury reported a $100m loss for the financial year, but earlier this year reported net sales revenue growth of 6.2 per cent and EBITS of $85.2 million for the six months ended 31 December 2014.
In its statement about the Asti sale Treasury said: "As a result of this transaction, TWE will recognise a loss on disposal of this asset group of approximately US$7.5m (pre-tax) which will be reflected in the financial results for the year ending 30 June 2015.
"As communicated to the market on 31 March 2015, TWE is executing plans to optimise its supply chain and accelerate a separate focus on the company's Luxury & Masstige versus Commercial wine portfolios, globally. This includes simplifying its supply chain network and removal of excess capacity, in both the USA and Australia."
Roger Nabedian, senior vice president and general manager of Gallo's Premium Wine Division, said: "We are thrilled to add the Asti Winery and vineyards to our North Coast fine wine operations. The property is filled with rich history and is located in a growing wine region that consumers recognise as being among the world's best."
"We look forward to bringing the Souverain brand into our expanding premium portfolio, in order to keep pace with growing consumer demand worldwide."
The deal sees Gallo purchase the Asti Winery and its 535-acre property in the Alexander Valley. Part of the agreement includes Treasury entering into a long-term leaseback of part of the vineyard that has traditionally provided the company with luxury fruit.
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