Australian wine maker Treasury Wine Estates Ltd. (TSRYY, TWE.AX) said Monday that it has received a sweetened takeover offer from U.S. private equity giant Kohlberg Kravis Roberts & Co. L.P. (KKR) and its partner Rhone Capital LLC for A$5.20 per share.
The revised proposal, by way of a scheme of arrangement, reflects an increase of A$0.50 or 10.6 percent from KKR's previous takeover offer of A$4.70 per share in April 2014 that was rejected by Treasury Wine's board of directors. It also represents a 40.9 percent premium to Treasury Wine's closing stock price of A$3.69 per share on April 15.
Treasury Wine had rejected KKR's earlier offer worth A$3.05 billion or $2.85 billion, saying that the offer was not in the interests of its shareholders and also did not reflect the fundamental value of the company.
Based on the revised proposal, Treasury Wine said its board has now concluded that it is in the interests of its shareholders to engage further with KKR and Rhône Capital. The bidders will be granted the opportunity to conduct non-exclusive due diligence, subject to the negotiation of an appropriate confidentiality agreement.
KKR and Rhône have said that the payment of any dividends or capital returns prior to completion of any transaction will impact their valuation of Treasury Wine and, accordingly, would need to be deducted from the price proposed.
Treasury Wine advised its shareholders not to take any action in response to the revised offer from KKR.
Southbank, Australia-based Treasury Wine Estates was created through the spin-off of the struggling wine operations of Australian beer maker Foster's Group Ltd. (FGL.AX, FBRWY) in May 2011. It owns prestigious wine brands such as Penfolds, Lindemans and Rosemount.
With 11,000 hectares of vineyards, sales of 32 million cases of wine annually, and revenues of about A$1.7 billion, TWE employs more than 3,500 winemakers, viticulturists, sales, distribution and support staff across 16 countries.
On the Australian Securities Exchange, TWE.AX shares are trading at A$5.15, up A$0.20 or 4.04 percent on a volume of 1.32 million shares.
KKR closed Friday's trading on the NYSE at $22.89, down $0.03 or 0.13 percent on a volume of 4.29 million shares.
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