Treasury Wines shuffles US wines with acquisition of Frank Family Vineyards
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Australian vintner, Treasury Wine Estates Ltd. said it will buy U.S. luxury winemaker Frank Family Vineyards for $315 million, saying the deal offered a rare opportunity to bolster its high-end wine portfolio.
Treasury said Napa Valley, California-based Frank Family Vineyards is highly complementary to its Americas business and fills a key portfolio gap for luxury chardonnay. Treasury said it is well placed to grow the business given its leading luxury sales credentials, national distribution network and California asset base.
“This is a compelling strategic and financial investment, comfortably meeting our investment criteria and one we expect will deliver attractive growth and financial returns for TWE’s shareholders over the long-term,” Treasury Chief Executive Tim Ford said.
Analysts have expected Treasury to make acquisitions as winemakers focus more on the lucrative higher-end parts of the market. Treasury has been selling off some of its downmarket U.S. brands and assets and it said Thursday that process was largely complete, with total net cash proceeds of about 300 million Australian dollars (US$218 million).
It said it is using those proceeds to help pay for Frank Family Vineyards. Treasury added that Frank Family Vineyards has a long-term track record of delivering strong revenue and earnings growth, as well as earnings margins in the range of 35%-40%.
The acquisition is expected to be completed in December.
Questions & Answers
Q.What is Treasury Wine Estates buying and for how much?
What is Treasury Wine Estates buying and for how much?
Treasury Wine Estates is acquiring U.S. Luxury winemaker Frank Family Vineyards for $315 million. This purchase is intended to bolster its high-end wine portfolio, particularly with luxury chardonnay.
Q.Why is Treasury Wine Estates making this acquisition?
Why is Treasury Wine Estates making this acquisition?
The company sees this as a rare opportunity to enhance its luxury wine offerings and fill a portfolio gap for chardonnay. The deal is described as a compelling strategic and financial investment.
Q.How is Treasury Wine Estates financing this purchase?
How is Treasury Wine Estates financing this purchase?
Treasury is using the proceeds from selling off some of its downmarket U.S. Brands and assets. These sales generated total net cash proceeds of about 300 million Australian dollars.
Q.When is the acquisition expected to be completed?
When is the acquisition expected to be completed?
The acquisition of Frank Family Vineyards by Treasury Wine Estates is anticipated to be finalised in December. Frank Family Vineyards has a strong track record of revenue and earnings growth.
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