Report: KKR and TPG team up to bid for Foster’s wine unit

The global private equity giants are said to be in partnership to bid for Treasury Wine Estates, after the Australian beverage producer rejected a previous A$2.7bn private equity bid.

Global private equity firms Kohlberg Kravis Roberts and TPG Capital have reportedly been in talks to team up to bid for the wine unit of Australian beverage producer Foster’s Group, according to Reuters.

It is reported that the two have yet to decide whether to proceed together or separately. TPG declined to comment and KKR could not be reached by press time.

Any talks come after Foster’s rejected an offer from an “international private equity firm” earlier this month to acquire all of its wine business, Treasury Wine Estates, for a consideration of between A$2.3 billion (€1.66 billion; $2.11 billion) and A$2.7 billion.

In a company statement, Foster’s said its board considered “the indicative proposed value range significantly undervalues Treasury Wine Estates and its future prospects”.

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

If reports are true, TPG is following up on its recent successful partnership with The Carlyle Group on the acquisition of Australian hospital chain Healthscope. The deal, which valued at A$2.7 billion, was approved by Australia’s Foreign Investment Review Board last week. 

Healthscope was TPG’s second deal in Australia, but Carlyle’s third. KKR has so far also invested in two deals in Australia: The private equity giant invested in Seven Media Group and BIS Industries Limited in 2006.

The bidding price for Treasury Wine Estates, which is likely to be higher than that of Healthscope, would also suggest a strong bank appetite for lending to buyout transactions in Australia. The financing package of the Healthscope deal was reportedly worth A$1.5 billion.