Drinking solo

29 September 2014 By Una Galani Follow @ugalani

The Australian owner of Penfolds ended talks with private equity bidders saying a $3.1 bln offer undervalues the company. A 11 pct share price drop suggests investors aren’t totally convinced. There may be room for buyers to return if the still-new CEO can’t turn things around.

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Treasury Wine Estates announced on Sept. 29 that it had terminated due diligence with two potential private equity suitors over takeover offers that valued it at A$3.38 billion ($3.1 billion).

The Australian owner of Penfolds said that it was apparent that the bidders are not able to support a transaction on terms and at a price acceptable to the board.

KKR and Rhone Capital jointly offered A$5.20 per share from the company on Aug.4 and another firm, believed to be TPG, matched it a week later. KKR said that it wished the company success going forward.

Treasury Wine said it reached the decision to end the process after it held discussions owners of approximately 50 percent of its shares and received clear feedback “from almost everyone” indicating that they believed the offer unvalued the company.

The private equity bidders did not identify any major concerns with the business, Treasury Wine added.

Shares in Treasury Wine fell 11.3 percent to A$4.37 by 3pm Australian time.

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