KKR betters takeover bid for Treasury Wine

The firm has returned with a A$3.4bn offer to buy out the Australian wine business

Global private equity firm Kohlberg Kravis Roberts has teamed with Rhône Capital in an improved takeover proposal for Treasury Wine Estates in Australia, the pair having had a bid rejected in April this year.

In the proposal, KKR and Rhône have offered A$5.20 ($4.28; €3.61) per share for all shares in the business, an increase of 10.6 percent or A$0.50 on its previous offer, and a premium of 40.9 percent to the closing share price on 15 April 2014 of A$3.69 per share, according to an Australian Stock Exchange statement.

The deal has a total potential value of A$3.4 billion – a marked improvement on the A$3.1 billion April bid – and is a tempting offer for the company’s shareholders.

“The Board of [Treasury Wine], together with its advisers, has concluded based on the revised proposal that it is in the interests of its shareholders to engage further with KKR and Rhône,” the company said in a statement.

“Therefore, subject to the negotiation of an appropriate confidentiality agreement, KKR and Rhône will be granted the opportunity to conduct non-exclusive due diligence.”

The firms’ previous offer was shadowed by questions over whether KKR had compromised the confidentiality of the bid, shortly after making a preliminary, indicative and non-binding proposal to acquire the business, having approached one or more of its shareholders to discuss the proposal.

“The board has considered the KKR proposal in the context of these renewed plans and concluded that the proposal does not reflect the fundamental value of the company and it is therefore not in the best interests of shareholders. The board of [Treasury Wine] does not intend to take any further action in relation to the proposal,” the statement from Treasury Wine said at the time. 

KKR declined to comment on the matter further, referring to a statement it had issued to the Australian Stock Exchange.

The firm confirmed the preliminary offer made in April, adding, “KKR has not executed a non-disclosure agreement with [Treasury Wine], and access to company records per our requests has not been provided. In the last week, KKR advisers held discussions with certain shareholders of [Treasury Wine] on a wall-crossed, confidential basis and subject to appropriate confidentiality protocols.”

The matter comes as KKR continues to try and deploy large amounts of capital in Asia’s developed markets, having raised a $6 billion Asia-focused fund, which closed in July last year.

In July this year, it emerged that the global private equity firm had joined Australian country manager Pacific Equity Partners in its plans to acquire ASX-listed compliance business SAI Global in a deal likely to be around A$1.1 billion – the amount PEP had offered in an earlier rejected bid.

SAI is now taking bidders in a second round of an auction process, Australian media reported last week.