US buyout firm TPG Capital has reportedly offered A$3.4 billion ($3.2 billion) for Treasury Wine Estates Ltd (TWE), matching a takeover bid by KKR & Co. (KKR) and Rhone Capital LLC.
A global private equity firm made a non-binding, A$5.20 cash-per-share offer for the maker of Penfolds Grange and asked that its identity be kept confidential, Treasury Wine said in a filing. The unidentified bidder is TPG, the person said, asking not to be named because the details are private.
By matching KKR’s offer, TPG can study the finances of the world’s second-largest listed winemaker in detail without committing to a purchase. CEO Mike Clarke has promised to revitalise Treasury Wine by spending more on marketing and selling off winery and packaging plants, amid oversupply problems in the US and a government austerity drive that’s curbed sales in China.
“A deal will probably get done once you have this much interest in the business,” Craig Young, who helps manage about A$24 billion as a portfolio manager at Tyndall Investment Management Ltd in Sydney, said by phone.
Extracting Value
The offer looks high and may be cut, as with the ongoing takeover of Australian baker Goodman Fielder Ltd, said Young, who doesn’t hold Treasury Wine shares. “You can offer anything to get your foot in the door, but from our perspective, it’s difficult to see how you could get that value out of it.”
Treasury Wine shares rose 3.5 per cent to A$5.31 as of 3.10 p.m. in Sydney. That’s the highest level in more than a year, above TPG’s indicative, conditional offer price. The identity of the bidder was reported earlier today by the Australian Financial Review, citing unidentified people.
KKR made an initial A$4.70-per-share offer for the winemaker in April and raised its bid on 4 August. TPG, the private equity firm run by David Bonderman, previously controlled Treasury Wine’s largest unit by sales, after buying it from Nestlé in the 1990s.
Along with Napa-based wine investment firm Silverado Partners, it bought the Beringer business from the Swiss consumer goods company for $350 million in 1996. It was later listed before being sold to Foster’s Group Ltd in 2000 for A$2.56 billion in debt and equity.
Bloomberg News, edited by ESM
