Foster's snubs PE offer for wine business

The Australian beverage company has rejected an offer of more than $2bn from an 'international' private equity firm for its subsidiary, Treasury Wine Estates.

Australian beverage producer Foster’s Group has received and subsequently rejected an offer from an “international private equity firm” to acquire all of its wine business for a consideration of between 
A$2.3billion (€1.66billion; $2.11 billion)and A$2.7billion, according to a company statement.

The statement noted that the Foster's board “considers the indicative proposed value range significantly undervalues Treasury Wine Estates and its future prospects”.

Australian Securities Exchange (ASX)-listed Foster’s declined to comment beyond the statement. It is unclear whether the company is proactively looking to divest its interest in Treasury Wine Estates, but the statement noted that Foster’s will “continue to consider any proposal that is in the best interests of shareholders”.

The Treasury Wine Estates portfolio includes brands such as Beringer, Chateau St. Jean, Lindemans, Wolf Blass and Penfolds. 

Australia continues to be a popular destination for pan-regional and global buyout firms looking to put substantial amounts of money to work in Asia.

Just two months prior, TPG Capital and The Carlyle Group agreed to de-list Australian hospital chain Healthscope with an A$2.7 billion offer, following a bidding war that had attracted interest from firms including CVC Asia Pacific, The Blackstone Group and Kohlberg Kravis Roberts. The deal was the largest to have been seen in the country in the past two years.

Australia is also high on the priority list for mid-market focused global firms looking at Asia. Around the same time as the Healthscope deal, Massachusetts and North Carolina-based Babson Capital made its first direct deal in Australia, investing an undisclosed amount in mezzanine debt notes in the debt “refinancing” of Pacific Equity Partners-backed Collins Foods Group, the largest KFC franchisee in Australia.

In May, Cleveland, Ohio-based Riverside Company made its first deal on Australian turf, investing an undisclosed sum for a majority stake in The Boost Investment Group, owners of Boost Juice Bars and Salsa’s Fresh Mex Grill. It had just opened its first Australian office the month before.

The firm followed that transaction a month later with the acquisition of Australian Medico Legal Services, a Melbourne-based provider of independent medical assessments and advisory services which are used by insurance organisations, corporations, government and legal entities to resolve contentious healthcare decisions.